Owning a percentage of a second property

E_Hu

Hi All

Long story short , my father in law might obtain 250k from selling a family home (1m/4), parents are thinking of putting this in the next house with DH'd bro and sis savings and no mortgage (no interest). The name of this house will be in siblings name but not DH because I work full time too and we be 'able' to get a mortgage and buy. However interest very high and I want to work part time after a second one or stop working temporarily. 

This means DH may not get a share of the 250k/3 if his name not in the house. We would like to propose he get 14% (i.e. if house 600k then 250/3/600) but he already joint own the home with me. We know we cannot ask for 250k/3 in cash and not put DH name as otherwise bro in law might need a mortgage or they might not be able to buy (or so they would say). We know bro and sis in law don't earn more than us but as a partner of the family not family, I still have to think of DD (age 3)so it is not like we are a couple with no children. 

Anyway if we ask for 14% of the property which would be part ownership of DH's second home  (first home he own with me), and say the home is 600k would he still be liable for the full stamp duty of second home? But we dont want any comlication of asking for name to be added AFTER purchase. The ultimate problem is dad in law's name not in property in the first place which i cant remember why they dont want that. 

Any advise would be welcomed as we have a lot of friends not owning home or no children to think about, so not sure who to ask. 

silvercar

If you increase the number of homes you own, you pay the higher SDLT. If his name is on the deeds it counts as ownership. So replacing your main home doesn’t incur higher SDLT, but buying a home without selling your current home does. As does buying a home to live in while you already own, or part own, another property in the background.

E_Hu

silvercar said:

If you increase the number of homes you own, you pay the higher SDLT. If his name is on the deeds it counts as ownership. So replacing your main home doesn’t incur higher SDLT, but buying a home without selling your current home does. As does buying a home to live in while you already own, or part own, another property in the background.

So is it not worth asking if he owns 14% of this 600k ‘second home’ if stamp
duty is 50k? 

Or can we ask to put it in our 3 y DH name? 

bobster2

E_Hu said:

silvercar said:

If you increase the number of homes you own, you pay the higher SDLT. If his name is on the deeds it counts as ownership. So replacing your main home doesn’t incur higher SDLT, but buying a home without selling your current home does. As does buying a home to live in while you already own, or part own, another property in the background.

So is it not worth asking if he owns 14% of this 600k ‘second home’ if stamp
duty is 50k? 

Or can we ask to put it in our 3 y DH name? 

This whole scheme sounds a bit bonkers. Presumably the motivation is something to do with inheritance tax or similar?

So FIL is going to take the equity from the sale of the house he currently owns and lives in and use this to buy a house with his children - which FIL will not be an owner of. Adult children will be owners. But FIL will live there? If so essentially FIL will be gifting equity to children. Will FIL be paying market rent to live there?

See "deprivation of assets" and "gift with reservation".

And to add to this, now you want the house to also be part owned by a 3 year old? So your 3 year old can be lumbered with the higher rate SDLT problem when they grow up? And lost of FTB status?

E_Hu

bobster2 said:

E_Hu said:

silvercar said:

If you increase the number of homes you own, you pay the higher SDLT. If his name is on the deeds it counts as ownership. So replacing your main home doesn’t incur higher SDLT, but buying a home without selling your current home does. As does buying a home to live in while you already own, or part own, another property in the background.

So is it not worth asking if he owns 14% of this 600k ‘second home’ if stamp
duty is 50k? 

Or can we ask to put it in our 3 y DH name? 

This whole scheme sounds a bit bonkers. Presumably the motivation is something to do with inheritance tax or similar?

So FIL is going to take the equity from the sale of the house he currently owns and lives in and use this to buy a house with his children - which FIL will not be an owner of. Adult children will be owners. But FIL will live there? If so essentially FIL will be gifting equity to children. Will FIL be paying market rent to live there?

See "deprivation of assets" and "gift with reservation".

And to add to this, now you want the house to also be part owned by a 3 year old? So your 3 year old can be lumbered with the higher rate SDLT problem when they grow up? And lost of FTB status?

You me both, it is a bit mad but because DH has a big family. Yes essentially this new house will not have FIL name which is why we feel we need to speak sooner than later. BIL and SIL are adults in 30s. FIL will not be paying rent and the idea is that because BIL and SIL will also use savings, that their name will be in the property , but seem to forget that DH is left out of FIL's share. 

Yes you do have a point, and a good one. It does sound like this is not ideal to ask for DD to be added in this home as she is only 3. Then it sound like the most ideal situation is if they can just give us the 250k/3 cash to reduce our mortgage and leave us out of this home so that we don't have to ask for such a specific percentage because normally between family there is no percentage, only names in the title.

Asking for a specific percentage is very awkward for us. But we are a bit bothered by even having to ask in the first place and wish they just realise this because 250/3 is no small amount.