1st time buyers advice please!

luckyfool

h500m wrote: »

I won't be selling either property for many years yet. (Well, i've still got to get both properties in the first place!!) But thanks for informing me, I wasn't aware that you'd have to pay tax on the profit of your second home. Guess i should've realised - the tax man doesn't like anyone to make too much profit without getting his hands on some of it!

What is the purpose behind your parents signing their property over to you?

Is it to potentially avoid the house or equity from it being taken into account in terms of potential long term care costs?

Is it to avoid inheritance tax?

For either of these you need to be very careful indeed as unless you structure things correctly you may end up being too clever for your own good. For long term care costs I'm pretty sure there are mechanisms in place to try to catch you out if you do what you are suggesting.

For inheritance tax, just signing the house over to you, but your parents continuing to live there would not be effective in terms of avoiding inheritance tax liability in the future. It would be considered to be a "gift with the reservation of benefit", so the tax man would consider the house to still remain within your parents estate and subject to a tax charge.

nb. This is just from memory and I'm not a professional tax advisor so don't take anything as gospel!

poppy10_2

luckyfool wrote: »

For either of these you need to be very careful indeed as unless you structure things correctly you may end up being too clever for your own good. For long term care costs I'm pretty sure there are mechanisms in place to try to catch you out if you do what you are suggesting.

Yep, if they sign the house over to you but continue living there without paying rent, then it is classed as a "gift with reservation," and the revenue can come after you.
http://articles.taxationweb.co.uk/index.php?id=317

Mr_helpful

poppy10 wrote: »

Yep, if they sign the house over to you but continue living there without paying rent, then it is classed as a "gift with reservation," and the revenue can come after you.
http://articles.taxationweb.co.uk/index.php?id=317

I think people are over complicating things for the OP. they want to know if they can buy house in Edinburgh. The tax issue can be sorted out later by taking advice when house is actually gifted. You dont even know if there is an IHT problem or not.

h500m

Thanks for the advice everyone, but as Mr Helpful says I am currently only interested in getting advice about a mortgages! If in the future I have to pay tax on the second property then thats no problem, we are not trying to con the taxman! It just seems to be a tradition in my family that the parents sign their house over to their sons/daughters - not sure why but im not going to complain!!