Gifted equity and paying off sibling

dragonladybute

Hello. Thanks for the add!

Just for info, we are in Scotland. 

Hubby and I are considering buying my Mum’s house and all living together. 

Mum is quite clear that she wants my sister and I to each have half the value of the house when she passes. 

My Dad passed away in Feb 24 and Mum can no longer manage the house.  We propose moving in and carrying out any repairs / modernisation. 

To simplify my query:

* We have a property to sell, which will give us (hopefully) about £75k profit.

*  Mum’s house is valued at £175k

* We are looking to take a mortgage for about £40k, buy Mum’s house for £87.5k off my

* Mum will pay my sister her £87.5k and she is gifting me my share of the equity (£87.5k) to go as a deposit for the mortgage. 

So my questions are:

- With the gifted equity does Mum still have any ownership rights to the house or is this just between us and the lenders? 

  If Mum does have ownership rights can she put a stop to us selling down the line?

- Are we legally required to give my Mum life rent status? We don’t intend kicking her out but just wondered where we stand. 

- Are there likely to be any tax implications for any of us?

We are getting conflicting info on this and thought I would try on here 😀

Thanks,


Dragonladybute 

user1977

The mortgage lender is likely to have difficulty with a non-borrowing parent living in the property, especially if they have provided a "gifted" deposit (which are usually meant to have no strings attached). Consider the potential problems if they want to repossess...doesn't look good to be kicking out the elderly (who may claim they were diddled by their kids...)

dragonladybute

user1977 said:

The mortgage lender is likely to have difficulty with a non-borrowing parent living in the property, especially if they have provided a "gifted" deposit (which are usually meant to have no strings attached). Consider the potential problems if they want to repossess...doesn't look good to be kicking out the elderly (who may claim they were diddled by their kids...)

Our current mortgage lender is happy to port our mortgage over and is aware of all the facts. 

Brie

Solicitors will need to get your mom to write a letter to the affect of "I have gifted dragon £87500 to buy me out of my house and forthwith will no longer have any claim to ownership of the house".   

This will likely make your bank happy to give you your mortgage.  The bank won't really care whether mom is living there or not as it's then a mortgage between you and them.  (mom is essentially a house guest....)   And so on this basis there is nothing to stop you selling the house in 5 years and putting mom out on the street. 

On the other hand if mom reaches a point where she needs round the clock care and hasn't the savings to pay for this the local authority will start poking about and wondering about mom giving you and sis all of her money.  This is considered deprivation of assets.  So unless mom has enough either coming in from pensions or has other savings the LA will look to you both to foot the bill for mom's care.  To the point where sis will need to pay them her portion and you will either need to sell the house or accept a lien on it so the LA gets their split when you eventually sell.

At least that's how it works down in Dorset.  When MiL went into care there was a lot that the LA poked at in our situation but some of it was overlooked due to the fact I was already over 60.  And MiL had a small amount of savings which staying in a care home started to burn through.  She was nearing the "LA must pay point" when she died so we never did get to the nasty bit.  

It's hard work - please make sure you factor that in to your game plan.