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  • FIRST POST
    • hmeah
    • By hmeah 8th Aug 18, 11:13 PM
    • 7Posts
    • 0Thanks
    hmeah
    sell my home to pensioner/retired parents
    • #1
    • 8th Aug 18, 11:13 PM
    sell my home to pensioner/retired parents 8th Aug 18 at 11:13 PM
    I own my home, valved at 550-600k, i have 225k left on the mortgage.

    My parents own a home, its valued at 450-500k, they have 30k remaining on their mortgage.

    They are elderly and will look to live with me, im thinking to sell their place and let them buy my house, i wanted to know how best to do this and if possible to still keep my name in my house along with theirs.

    Another thing im thinking is will the bank (halifax) give them money on their house (100k) to give me to bring down my mortgage?

    I want the most tax efficient & simplified way to arrange this.

    Thanks
Page 1
    • kidmugsy
    • By kidmugsy 8th Aug 18, 11:41 PM
    • 12,203 Posts
    • 8,645 Thanks
    kidmugsy
    • #2
    • 8th Aug 18, 11:41 PM
    • #2
    • 8th Aug 18, 11:41 PM
    I own my home, valved at 550-600k, i have 225k left on the mortgage.

    My parents own a home, its valued at 450-500k, they have 30k remaining on their mortgage.

    They are elderly and will look to live with me, im thinking to sell their place and let them buy my house, i wanted to know how best to do this and if possible to still keep my name in my house along with theirs.
    Originally posted by hmeah
    As I understand it, in England and Wales up to four people can own a property together. I don't suppose there's any reason why you and your parents couldn't own the house together either as "joint tenants" or as "tenants in common". You'd need to see solicitors to arrange it. You should be sure also to ask them to warn you about all the things that might go wrong with a scheme like this.
    Free the dunston one next time too.
    • Tom99
    • By Tom99 9th Aug 18, 12:07 AM
    • 3,116 Posts
    • 2,172 Thanks
    Tom99
    • #3
    • 9th Aug 18, 12:07 AM
    • #3
    • 9th Aug 18, 12:07 AM
    They will pay stamp duty on any price they pay you and if they pay you more than the open market value for a share the excess will count as a gift for IHT.


    So if your house value is 600k and they pay 500k for 2/3rd, that's a 50k gift.
    • xylophone
    • By xylophone 9th Aug 18, 12:23 AM
    • 27,688 Posts
    • 16,644 Thanks
    xylophone
    • #4
    • 9th Aug 18, 12:23 AM
    • #4
    • 9th Aug 18, 12:23 AM
    You would consult a solicitor.

    Your parents could sell their house and move in with you.

    They could then repay your mortgage and in return your house is registered as tenants-in-common with the interests of you/your father/your mother in the correct proportions and any declaration of trust prepared by the solicitor.

    The balance of their cash is saved/invested to produce an income to boost their pensions.
    • DairyQueen
    • By DairyQueen 9th Aug 18, 12:24 AM
    • 585 Posts
    • 967 Thanks
    DairyQueen
    • #5
    • 9th Aug 18, 12:24 AM
    • #5
    • 9th Aug 18, 12:24 AM
    Possible pitfalls:

    - Care home fees. Means test property exception fails if both/the survivor requires residential care whilst you are under age 60.
    - Care home fees - possible deprivation of assets if they gift you 100k and then require care.
    - Potential for IHT if they gift you 100k.
    - They could look at equity release or a retirement mortgage. Neither of which sound like a great option if the aim is to reduce your mortgage. They would cost more than your standard mortgage and would require repayment of their current 30k loan.
    - Your income may affect their entitlement to some benefits/grants if you share a home.

    Generally, it's better if elderly parents' capital is retained for their own use in their lifetime. They may need to finance residential care and self-funders have much better choice and quality of care home. They may also wish to release equity from their home for their own use and gifting you a substantial amount would limit their options. Encumbering them with a big mortgage (lifetime or otherwise) at their age has plenty of downside.
    Last edited by DairyQueen; 09-08-2018 at 12:26 AM. Reason: Typo
    • xylophone
    • By xylophone 9th Aug 18, 12:46 AM
    • 27,688 Posts
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    xylophone
    • #6
    • 9th Aug 18, 12:46 AM
    • #6
    • 9th Aug 18, 12:46 AM
    If they repaid his mortgage against a legal agreement to register ownership of his house as tenants-in-common in the correct proportions (ie reflecting the 225,000 they had used to pay off his mortgage) they wouldn't have made him a gift - they would have bought into the house and would have an interest in the property?

    There would also be a Declaration of Trust.

    If one or both parents required care then presumably the LA could register a charge against the parental share of the property?

    There could also be the balance of the money received from the sale of their own property (200,000 +) which they could save/invest for any future care needs - presumably they also have private/state pensions to set towards the cost of care?
    • DairyQueen
    • By DairyQueen 9th Aug 18, 1:50 AM
    • 585 Posts
    • 967 Thanks
    DairyQueen
    • #7
    • 9th Aug 18, 1:50 AM
    • #7
    • 9th Aug 18, 1:50 AM
    If they repaid his mortgage against a legal agreement to register ownership of his house as tenants-in-common in the correct proportions (ie reflecting the 225,000 they had used to pay off his mortgage) they wouldn't have made him a gift - they would have bought into the house and would have an interest in the property?

    There would also be a Declaration of Trust.

    If one or both parents required care then presumably the LA could register a charge against the parental share of the property?

    There could also be the balance of the money received from the sale of their own property (200,000 +) which they could save/invest for any future care needs - presumably they also have private/state pensions to set towards the cost of care?
    Originally posted by xylophone
    I think OP is suggesting (Option 1) that parents pay the full 400k to buy 2/3rds of his/her home so that the 225k mortgage can be repaid, and with 175k left for OP's pocket. After settling their own mortgage, OP's parents would be left with approx. 20-70k.

    If all three owned the property, if a parent needed residential care, the house value would only be disregarded if:
    a) The other parent was still living in the property.
    b) A close relative (including a child) was living there, and it was their primary residence, and they were under 18, over 60, or disabled.

    The danger, therefore, is that the survivor of OP's parents will require residential care when OP is under age 60. If that happens then it's probable that the house must be sold, or OP must buy-out the parent (at full market price).

    The LA will only pay for care for self-funders for a max of 12 weeks when a property needs to be sold. They will then reclaim the funds (plus interest).

    They will not take a charge on the property and pay the fees until the person dies.

    It's a numbers game. LA's are so cash-strapped that they struggle to finance those who can't self-fund. They would face an acute cash flow problem in a nano-second if they were effectively providing indefinite loans to self-funders.

    I take your point that the parent requiring care may have sufficient pension and/or other assets to self-fund without using the house equity. If so, then the house would be safe until those funds were exhausted. However, the fees will run to 45k-60k per year and not many folk can sustain that for long without resorting to house equity.
    Last edited by DairyQueen; 09-08-2018 at 7:22 PM. Reason: Typo
    • TadleyBaggie
    • By TadleyBaggie 9th Aug 18, 9:21 AM
    • 2,980 Posts
    • 2,294 Thanks
    TadleyBaggie
    • #8
    • 9th Aug 18, 9:21 AM
    • #8
    • 9th Aug 18, 9:21 AM
    Duplicate thread: https://forums.moneysavingexpert.com/showthread.php?t=5879572
    • Brynsam
    • By Brynsam 9th Aug 18, 9:46 AM
    • 1,740 Posts
    • 1,278 Thanks
    Brynsam
    • #9
    • 9th Aug 18, 9:46 AM
    • #9
    • 9th Aug 18, 9:46 AM
    I want the most tax efficient & simplified way to arrange this.
    Originally posted by hmeah
    Then take professional advice. Given the amounts involved, it is astonishing that you even ask on a board like this!
    • sheramber
    • By sheramber 9th Aug 18, 12:24 PM
    • 5,595 Posts
    • 4,246 Thanks
    sheramber
    Are these 2 alternatives?

    1. your parents sell their house and buy yours but you want to be still named on the deeds of the house.

    2 . your parents take out a second mortgage/equity release for 100k on their house to give to you so you can reduce your mortgage?
    • DairyQueen
    • By DairyQueen 9th Aug 18, 7:13 PM
    • 585 Posts
    • 967 Thanks
    DairyQueen
    I think that's roughly what OP has in mind.
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