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Transfer deeds or sell property from parents

Hiya all

My siblings and I have been fortunate enough to have our parents want to transfer or sell their only property (where they live) into our names on the deeds.
The house is worth around £400,000 and is mortgage free.
Now for the twist... They want some money to enjoy the later stage of their lives which I'm all for. They considered equity loans but wasn't happy to go ahead so a consideration for us to remortgage the house and give them a lump sum to do what they want with it is being explored.

So main things to consider, if we buy it for £1. Will that have any impact on selling it at a later date?
What fees are involved if buying a house? Ideally we would like to make it as cost effective as possible. Can we avoid solicitors ect?
Lastly is this all above board and legal?

Parents wouldn't go into care so not a consideration re fees

Cheers x
«13

Comments

  • Annisele
    Annisele Posts: 4,827
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    I think this is something where "avoiding solicitors etc" might end up costing you more than involving them.

    I read your post as saying that you and your siblings are planning to mortgage the house your parents are currently living in (and not, for example, your own houses). You will very much struggle to get a lender to agree to lend against a house that is being occupied by its former owners.

    Your plan also doesn't sound very tax efficient. You and your siblings might end up owing Capital Gains Tax on any increase in the value of the property (whereas if it stays in your parents' ownership, as their main home there will be no CGT).

    Do you have any other way of raising the money? I'm not at all *advising* this, but just as a suggestion of something else to consider - are you able to raise money some other way and then lend it to your parents? You could potentially lend at an interest rate of 0% secured on the house.
  • Sea_Shell
    Sea_Shell Posts: 9,272
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    edited 25 January 2020 at 8:25AM
    How much is "some money"? £5,000 or £50,000?
    How old are your parents?
    You say they won't go into care, but how can you know that!?
    Are you/sibling married?. What if you divorced? (or died first!)
    What if they needed to move/downsize?
    Do you currently own (mortgage) or rent?
    Can you raise some money to lend to them?

    Is there any particular reason why they've not been able to save up themselves for "fun" money in retirement? Are their basic needs covered with their pensions?

    Personally, if my parents wanted to "enjoy" their retirement and were sitting on a £400,000 house, then my first suggestion would be for them to downsize!! If they won't consider that...then, well, that's THEIR choice.

    It would also depend what they mean by "enjoy"? Is it for holidays, a new car, eating out etc. or just being able to put the heating on!! What they want the money for would have a huge bearing on how it's achieved.
    How's it going, AKA, Nutwatch? - 12 month spends to date = 2.47% of current retirement "pot" (as at end February 2024)
  • getmore4less
    getmore4less Posts: 46,882
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    One option is they keep the house, you lend them the money and put a charge on the house.

    if the house needs to be sold before they die you get your debt back.

    the loan can be lump sums or monthly payments you just keep track of the totals and have repayment terms that keep the debt enforceable
  • Linton
    Linton Posts: 17,064
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    If you want to give your parents some money, give them some money.
    If you want to lend your parents some money, lend them some money with a charge on the house though you may not get it repaid for many years.
    There is no benefit in involving the house before your parents death either for your parents or yourself - you cannot do anything with it. And there are many downsides for both you and your parents. Consider all the what-ifs: Will your parents be thrown out on the street if you are unable to keep up mortgage payments or die, divorce or become bankrupt and the house has to be sold? Consider the extra costs and extra taxes.
  • Hiya all

    My siblings and I have been fortunate enough to have our parents want to transfer or sell their only property (where they live) into our names on the deeds.
    The house is worth around £400,000 and is mortgage free.
    Now for the twist... They want some money to enjoy the later stage of their lives which I'm all for. They considered equity loans but wasn't happy to go ahead so a consideration for us to remortgage the house and give them a lump sum to do what they want with it is being explored.

    So main things to consider, if we buy it for £1. Will that have any impact on selling it at a later date?
    What fees are involved if buying a house? Ideally we would like to make it as cost effective as possible. Can we avoid solicitors ect?
    Lastly is this all above board and legal?

    Parents wouldn't go into care so not a consideration re fees

    Cheers x

    I don't understand how this works. Your parents have a property worth £400k, they want to release equity in order to have money to spend, you are proposing buying the property for £1, where is the money your parents want to spend going to come from? £1 isn't going to go very far.

    Are you proposing to buy the property for £1, then get a joint mortgage with your siblings to then give your parents a lump sum?
  • Hiya
    Appreciate all the feedback.... Let me clarify a few things
    We was hoping to remortgage for 50k, a newish car, few holidays, some home improvements and any extras they wish to indulge in.
    My parents are just over 70 and worked extremely hard all their lives. They are keen to leave as much to us as possible. Down sizing is not an option for them, they love their home.
    We are happy to give not loan our parents the money they would like but with a loan the interest is likely to be sky high.
    Charge back on the house is a new concept to us so I'll look into this.

    All of you have mentioned scenarios which we have not fully looked into so this is helpful.
    Without changing the house deeds, could we consider our parents remortgaging then we cover the monthly payments?

    As the property is under the current threshold for inheritance tax, I suppose selling the property to us will not benefit us as much as it would others who would need to pay that tax .

    Cheers for the insight
  • davidmcn
    davidmcn Posts: 23,596
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    As the property is under the current threshold for inheritance tax, I suppose selling the property to us will not benefit us as much as it would others who would need to pay that tax .
    If they continue living in the property rent-free then it doesn't help with Inheritance Tax anyway.
  • pleasedelete
    pleasedelete Posts: 2,286
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    You also need to look at deprivation of assets

    Stamp Duty of £22,000 for a second home- based on value (which isn't £1) . It is due if you are being added to a mortgage/title deeds – this is considered as ‘buying’ a share of property or land
    June challenge £100 a day £3161.63 plus £350 vouchers plus £108.37 food/shopping saving

    July challenge £50 a day. £ 1682.50/1550

    October challenge £100 a day. £385/£3100
  • Sea_Shell
    Sea_Shell Posts: 9,272
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    If you're all happy to "give not loan" your parents £50,000, then do so.

    It doesn't need complicated "schemes" if you have the cash.

    The complications come if you don't actually have the cash and need to pay ANY interest to "borrow to give".

    Only you can decide if you want to incur interest on top of the gift.
    How's it going, AKA, Nutwatch? - 12 month spends to date = 2.47% of current retirement "pot" (as at end February 2024)
  • steampowered
    steampowered Posts: 6,176
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    It sounds like the purpose of your scheme is to raise funds by taking out a mortgage.

    Who would make repayments on the mortgage?

    Your parents won't be able to get a mortgage given their age. You would struggle to get a buy-to-let mortgage on the property as it isn't a true letting.
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