Parents downsizing and Inheritance

Beaumont176

Good evening,

My retired parents are looking to downsize / upgrade from their upstairs / downstairs semi detached home (value approx 140k) to a Bungalow (value approx 230k) due to their struggle with mobility as they do not have any downstairs bedrooms in their current home and the stairs are becoming a struggle.

Our family have had a discussion and are wondering if the following would be legal / possible in Scotland and what Tax / inheritance implications there would be if any.

1. My parents sell their home 
2. I pay my sister half the value of my parents home.
3. I use the remaining value of my parents house sale + personal savings and apply for a mortgage to purchase their new home. (I am currently mortgage free and have no rental properties)

This would allow my parents to have the home they wish for that they cannot buy themselves. 
My sister would have financial stability.
I would invest my current savings into a second home.

If I transfer my sister +/- 70k how does the banks / tax system. See this and would it be liable for tax.

Would it be as simple as using my half of the inheritance to apply for a mortgage for my parents to stay in the house?

Thanks in advance.

bobster2

Where has the money from the sale of your parents home gone? Have they given (gifted) it to you?

If so - then Google "deprivation of assets".

pinkshoes

What if your parents become ill and require care? Will you be providing that or if needed paying? Otherwise deprivation if assets would be an issue here.

Beaumont176

bobster2 said:

Where has the money from the sale of your parents home gone? Have they given (gifted) it to you?

If so - then Google "deprivation of assets".

pinkshoes said:

What if your parents become ill and require care? Will you be providing that or if needed paying? Otherwise deprivation if assets would be an issue here.

Thanks for the information. I had no idea this was a thing. Yes that would be particularly tricky situation.

Keep_pedalling

Nothing illegal about it, but deliberate deprivation of assets could be a major problem in the not too distant future. Another consideration is what happens if something happens to you or you run into financial difficulty?

Another problem is the extra 8% additional dwelling tax you are going to have to find. A better option, if you can manage it, is for them to purchase the bungalow with the proceeds plus a loan from you secured with a charge against the bungalow. 

Beaumont176

Keep_pedalling said:

Nothing illegal about it, but deliberate deprivation of assets could be a major problem in the not too distant future. Another consideration is what happens if something happens to you or you run into financial difficulty?

Another problem is the extra 8% additional dwelling tax you are going to have to find. A better option, if you can manage it, is for them to purchase the bungalow with the proceeds plus a loan from you secured with a charge against the bungalow. 

Thanks again for the additional information. 

- Deprivation of Assets.
- Dwelling tax. 

Doesn't look like this is viable as first thought. I'm glad that I posted on here.

Thanks for the input much appreciated.

Can you elaborate on the following "plus a loan from you secured with a charge against the bungalow. "

user1977

Also mortgage lenders tend not to be fond of there being elderly non-owners living in the house.

Albermarle

Beaumont176 said:

Keep_pedalling said:

Nothing illegal about it, but deliberate deprivation of assets could be a major problem in the not too distant future. Another consideration is what happens if something happens to you or you run into financial difficulty?

Another problem is the extra 8% additional dwelling tax you are going to have to find. A better option, if you can manage it, is for them to purchase the bungalow with the proceeds plus a loan from you secured with a charge against the bungalow. 

Thanks again for the additional information. 

- Deprivation of Assets.
- Dwelling tax. 

Doesn't look like this is viable as first thought. I'm glad that I posted on here.

Thanks for the input much appreciated.

Can you elaborate on the following "plus a loan from you secured with a charge against the bungalow. "

We get a lot of these types of posts. The situation is rarely as simple as first thought.

p00hsticks

Beaumont176 said:

Keep_pedalling said:

Nothing illegal about it, but deliberate deprivation of assets could be a major problem in the not too distant future. Another consideration is what happens if something happens to you or you run into financial difficulty?

Another problem is the extra 8% additional dwelling tax you are going to have to find. A better option, if you can manage it, is for them to purchase the bungalow with the proceeds plus a loan from you secured with a charge against the bungalow. 

Can you elaborate on the following "plus a loan from you secured with a charge against the bungalow. "

Your parents sell their current home for £140k, 
They put this towards a bungalow costing £230k. 
You raise the additional £90k they need to buy the bungalow (perhaps from savings, perhaps by taking out a mortgage on your own home) and give it to them - the bungalow is registered in your parents name but with a charge against it to say that they owe you £90k, which will be paid back to you when the bungalow is eventually sold.