buying a % of parents' (mortgage free) house

Options
markfff123
markfff123 Posts: 5 Forumite
in Savings & investments
Dear all,


My parents would like to release some of the money in their mortgage-free house (selling not an option) to enable them to travel and visit family overseas. Only £ is what is in the house, which is worth roughly 240k (will get a full valuation done). We have talked about me giving 40k in cash to enable them to enjoy their retirement more in return for 20% of the property. As we see it, the property would need to be sold once one of them passes, and the other would need to enter care, with my 20% being returned then.


My questions are whether this seems like a sensible plan, if there are issues that will crop up down the line that I haven't considered, or if there is a better option.


Thanks in advance
«13

Comments

  • Linton
    Linton Posts: 17,162 Forumite
    Name Dropper First Post First Anniversary Hung up my suit!
    Options
    Your plan seems a lot more sensible than some we have seen. What happens if you die/go bankrupt/divorce before they die? The answers may be simple but you need to have thought them through.
  • markfff123
    markfff123 Posts: 5 Forumite
    Options
    Good points which will need thought.


    So on the whole it sounds like a sensible way to go about things? Would I get hit for capital gains tax or anything? Also worried about house prices post a possible no-deal Brexit. The house is in the country though, and possible London prices getting hit hardest?)
  • IanManc
    IanManc Posts: 2,085 Forumite
    First Anniversary First Post Combo Breaker Name Dropper
    Options
    markfff123 wrote: »
    Dear all,


    My parents would like to release some of the money in their mortgage-free house (selling not an option) to enable them to travel and visit family overseas. Only £ is what is in the house, which is worth roughly 240k (will get a full valuation done). We have talked about me giving 40k in cash to enable them to enjoy their retirement more in return for 20% of the property. As we see it, the property would need to be sold once one of them passes, and the other would need to enter care, with my 20% being returned then.


    My questions are whether this seems like a sensible plan, if there are issues that will crop up down the line that I haven't considered, or if there is a better option.


    Thanks in advance

    What about the possibility that one of them "passes" and the other one is fit and well and stays in the house for another thirty years without needing any care?
  • Reed_Richards
    Reed_Richards Posts: 4,169 Forumite
    First Post Name Dropper First Anniversary Combo Breaker
    Options
    markfff123 wrote: »
    Would I get hit for capital gains tax or anything? Also worried about house prices post a possible no-deal Brexit. The house is in the country though, and possible London prices getting hit hardest?)

    You can't have it both ways. If the value of your share in the house rises by more than whatever the annual CGT allowance is when you sell then you will have to pay some tax. If the value of the house falls then you won;t get all your money back when it is sold.
    Reed
  • markfff123
    markfff123 Posts: 5 Forumite
    Options
    excellent point.

    Very glad I called in the wisdom of the forum
  • 18cc
    18cc Posts: 2,120 Forumite
    Options
    Also be aware - not sure what your plans are for buying your own house or if you already own one but be aware the 3% extra stamp duty tax

    if you were to buy in the future this 40k share would count as 'already owning a property' and would pay an extra 3% on your new purchase
  • 18cc
    18cc Posts: 2,120 Forumite
    Options
    rather then buy a share of the property could you not just a lend the money and secure the loan as a charge against the property

    That would also be much cheaper in fees as your parents would not effectively be selling part of a property and have someone else buy it
  • markfff123
    markfff123 Posts: 5 Forumite
    Options
    18cc, I don't understand how this would work. Could you give it me in laymans?
  • lisyloo
    lisyloo Posts: 29,615 Forumite
    Name Dropper First Anniversary First Post
    Options
    What happens if you die/go bankrupt/divorce before they die?


    Can a partner going through divorce evict the parents from their home (via a court order) in order to liquidate their divorce settlement?
  • p00hsticks
    p00hsticks Posts: 12,820 Forumite
    First Post Name Dropper Photogenic First Anniversary
    Options
    markfff123 wrote: »
    18cc, I don't understand how this would work. Could you give it me in laymans?


    Rather than you actually owning part of the property (having your name on the deeds) you'd simply have a charge on the property - your parents would still own it, but if and when the property is sold, you'd get your money back in return fr the charge being lifted.


    This is the same way that a mortgage works - the bank / building society lending you the money doesn't actually own the property, but has a charge against it to protect it's interests.
This discussion has been closed.
★ ★ ★ Meet your Ambassadors

Categories

  • All Categories
  • 343.2K Banking & Borrowing
  • 250.1K Reduce Debt & Boost Income
  • 449.7K Spending & Discounts
  • 235.3K Work, Benefits & Business
  • 608K Mortgages, Homes & Bills
  • 173.1K Life & Family
  • 247.9K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards