Acquiring family home

Smalls23

Hi all, first of all thank you in advance for any help offered it will be greatly appreciated!

Quite simply i am looking for advice on acquiring parents house and potential options.

Parents have been divorced approx 12 years, house is the only asset split 50:50. circa 90k remaining on an offset mortgage, there is no early repayment charge which can be made.

We have agreed for me to purchase my fathers 50% and mother to gift me the other 50%, while mother continues living at the residence.

I am looking for any advice or potential pitfall's on the below options or other options that i am not aware of.

1. Pay the remaining debt off and transfer the assets with the land registry. Then take equity out to repay Father.

• Father has been privately renting for a third of the time, while not owning another property - is he still entitled to CGT?
• 
  

2. Traditional mortgage for 50% house value minus 50% of outstanding debt

• Is any CGT required on this process for my parents?
• Is there any implications this could cause for my mother in regards to continue living at the residence?

3. Join current mortgage and then remortgage.

I favor option 1 as i think it may be the best option for simplicity and tax however i can imagine others will have valid opinions.

Option 3 i am completely not sure about and would like general advice.

Many thanks!!

 

p00hsticks

Will you be living in the property with your mother ?

what is the reasoning for wanting to do this ?

mebu60

Why is mother gifting you the 50%? See 'deprivation of assets' should she require care in the future. Also she would have no security as it would be wholly your house.

Do you own another property? Where will you be living?

As @p00hsticks says, what are you trying to achieve? 

Keep_pedalling

Your mother would be extremely foolish to do this as it risks her long term security. If this is some half baked idea to reduce IHT or care costs it won’t work because it will be a gift with reservation of benefit and it will be classed as deliberate deprivation of assets. 

It also seems unfair that your father gets a pile of cash and your mother gets nothing.

Smalls23

Thank you @p00hsticks @mebu60 @Keep_pedalling

Essentially we are trying to relieve money for father secure his future as mortgage is expiry. 

Father has longed moved out and we have agreed to pay him out as mortgage ends in 2 years. Mother will not be able to afford to buy him out nor could I borrow 100% house price. if sold then she will not be able to live in an as good home. 

Mother will continue live at home with me and it will be as I assume my permanent home meanwhile living between home and my girlfriends. 

This is no scheme to avoid tax of any sort simply just understanding options as much as possible. 

I understand the need for concerns regarding mother gifting me her half, it’s an agreement and she is receiving individual advice from friends and family. 

Thank you 

elsien

She would be better off with advice from a solicitor rather than friends and family. 

I’m another one who is not seeing why your father walks away with 50% of the value of the house and your mother with nothing. Except the temporary right to stay in the property that could be removed at any time if your personal circumstances change or you have a falling out. 

it also ties her to the house with no other options, when potentially in the future she may wish to downsize or live somewhere more accessible. 

You say neither of them have any other assets, but do neither have any sort of a pension that should also be taken into account? 

Keep_pedalling

As above you mother needs independent professional advice before she takes such a risk with her long term security. What happens to her if you die before she does? What happens if you marry then divorce? What happens if you run into financial difficulty and the house has to be sold? 

Tabieth

I’m going to assume that you mean well but your mother is getting a very bad deal here. She desperately needs to get independent advice.  And, assuming you want what’s best for her, I’d take a step back and reconsider. 

_Penny_Dreadful

Smalls23 said:

Thank you @p00hsticks @mebu60 @Keep_pedalling

Essentially we are trying to relieve money for father secure his future as mortgage is expiry. 

Father has longed moved out and we have agreed to pay him out as mortgage ends in 2 years. Mother will not be able to afford to buy him out nor could I borrow 100% house price. if sold then she will not be able to live in an as good home. 

Mother will continue live at home with me and it will be as I assume my permanent home meanwhile living between home and my girlfriends. 

This is no scheme to avoid tax of any sort simply just understanding options as much as possible. 

I understand the need for concerns regarding mother gifting me her half, it’s an agreement and she is receiving individual advice from friends and family. 

Thank you 

Your mum doesn’t need to give away all of her equity. In fact I think you’d struggle to get a mortgage where the deposit is coming from someone’s equity and that person will continue to live in the property but not be party to the mortgage. 

If you want to buy your father out then I suggest you consider a joint mortgage with your mother with a deed of trust set up stating you each own 50% of the equity. You should also consider how owning 50% of the property will impact your future. For example, if you decide to move out and purchase a new home for yourself whilst continuing to own 50% of this will you’ll face higher rate of SDLT/LBTT/LTT. 

Your parents also need to consider the total marital assets and not just the house. For example, if one of them has a larger pension than the other could be entitled to a share of that. Rather than taking a share of the pension that person could take more of the equity. 

mybestattempt

_Penny_Dreadful said:

Smalls23 said:

Thank you @p00hsticks @mebu60 @Keep_pedalling

Essentially we are trying to relieve money for father secure his future as mortgage is expiry. 

Father has longed moved out and we have agreed to pay him out as mortgage ends in 2 years. Mother will not be able to afford to buy him out nor could I borrow 100% house price. if sold then she will not be able to live in an as good home. 

Mother will continue live at home with me and it will be as I assume my permanent home meanwhile living between home and my girlfriends. 

This is no scheme to avoid tax of any sort simply just understanding options as much as possible. 

I understand the need for concerns regarding mother gifting me her half, it’s an agreement and she is receiving individual advice from friends and family. 

Thank you 

Your mum doesn’t need to give away all of her equity. In fact I think you’d struggle to get a mortgage where the deposit is coming from someone’s equity and that person will continue to live in the property but not be party to the mortgage. 

If you want to buy your father out then I suggest you consider a joint mortgage with your mother with a deed of trust set up stating you each own 50% of the equity. You should also consider how owning 50% of the property will impact your future. For example, if you decide to move out and purchase a new home for yourself whilst continuing to own 50% of this will you’ll face higher rate of SDLT/LBTT/LTT. 

Your parents also need to consider the total marital assets and not just the house. For example, if one of them has a larger pension than the other could be entitled to a share of that. Rather than taking a share of the pension that person could take more of the equity. 

The parents have been divorced for 12 years.

Assuming there was a financial settlement at the time then the current 50/50 property share was presumably one aspect of the split of all marital assets at the time.

If there was no financial settlement, perhaps the time has come to document the agreed split of all those assets.

loubel

I agree that mother should not be giving away her 50% of the house. And, as you have said you will need to mortgage it to pay for dad's half, you won't be able to let mother stay in the house unless she is joint owner with you and named on the new mortgage. Is this an option?