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    • Batmandy72
    • By Batmandy72 31st Jul 17, 6:25 AM
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    Batmandy72
    Can I buy my parents house
    • #1
    • 31st Jul 17, 6:25 AM
    Can I buy my parents house 31st Jul 17 at 6:25 AM
    My parents currently have a mortgage outstanding on their property. Equity of approx 70k.
    They will both be retired soon and we have discussed the option of me paying off the mortgage, making some home improvements and letting them live there. My questions are; am I able to do this, is it an easy process and are there any tax implications?
    Thank you
Page 1
    • Fermion
    • By Fermion 31st Jul 17, 8:41 AM
    • 112 Posts
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    Fermion
    • #2
    • 31st Jul 17, 8:41 AM
    • #2
    • 31st Jul 17, 8:41 AM
    Yes you can do this - we did something similar several years ago with my wife's mother.
    You need to talk to a conveyancing solicitor. Probably the easiest option is to change the title deeds of the property so that you and your parents are "tenants in common" for the property, but set up a "Deed of Trust" such that on the sale of the property 100% of the proceeds goes to you. viz. you become responsible for major property works but they continue to be responsible for day to day services (ie gas, electric and council tax etc).

    A Solicitor would typically charge about 300 for this.

    Obviously you would clear the mortgage as part of the process before registering the new title with the land registry.

    By keeping them as "tenants in common" on the title deeds means that you avoid any issues with HMRC claiming you are receiving rent!

    The only minor potential issue would be IHT limits but no problem so long as one of them lives 7 years.
    Last edited by Fermion; 31-07-2017 at 8:48 AM. Reason: additional information
    • Keep pedalling
    • By Keep pedalling 31st Jul 17, 8:51 AM
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    Keep pedalling
    • #3
    • 31st Jul 17, 8:51 AM
    • #3
    • 31st Jul 17, 8:51 AM
    If you are doing this with cash no problem, but if you need a mortgage you may struggle to find a lender.

    Unless you are also paying them for the equity they hold in the house they would be very foolish to proceed with this. No one should simply give away their main assets coming up to retirement.
    • Keep pedalling
    • By Keep pedalling 31st Jul 17, 8:53 AM
    • 7,021 Posts
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    Keep pedalling
    • #4
    • 31st Jul 17, 8:53 AM
    • #4
    • 31st Jul 17, 8:53 AM
    If you are doing this with cash no problem, but if you need a mortgage you may struggle to find a lender.

    Unless you are also paying them for the equity they hold in the house they would be very foolish to proceed with this. No one should simply give away their main assets coming up to retirement.
    Originally posted by Keep pedalling
    Othing things to consider is stamp duty which will include the addition 3% second home, CGT could also come in at some point in the future. You would also have the responsabilities that go with being a landlord.
    • Fermion
    • By Fermion 31st Jul 17, 9:05 AM
    • 112 Posts
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    Fermion
    • #5
    • 31st Jul 17, 9:05 AM
    • #5
    • 31st Jul 17, 9:05 AM
    Othing things to consider is stamp duty which will include the addition 3% second home, CGT could also come in at some point in the future. You would also have the responsabilities that go with being a landlord.
    Keeping your parents on the title deeds as "Tenants in Common" but with a "Deed of Trust" avoids this
    • Linton
    • By Linton 31st Jul 17, 9:46 AM
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    Linton
    • #6
    • 31st Jul 17, 9:46 AM
    • #6
    • 31st Jul 17, 9:46 AM
    How will you guarantee your parents security? For example what happens if you die first, are involved in an expensive divorce or go bankrupt, or you and they just fall out? What happens if they want to move elsewhere?

    What are they hoping to achieve by selling their home to you? In my view, they would be very foolish to do this. If they need the money and you have some why not give them it covered by a charge on the house?
    • xylophone
    • By xylophone 31st Jul 17, 12:14 PM
    • 31,418 Posts
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    xylophone
    • #7
    • 31st Jul 17, 12:14 PM
    • #7
    • 31st Jul 17, 12:14 PM
    You could lend your parents the money to pay off their mortgage and secure the loan with a first charge on their home.

    This would avoid any "deprivation of assets" question should either of them ever have to go into means tested care.

    The loan could be interest free, interest bearing, (you would report to HMRC) or rolled up - if the latter, there would be tax considerations when the interest was eventually received.
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