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buying a % of parents' (mortgage free) house
markfff123
Posts: 5 Forumite
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
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
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Comments
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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.0
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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?)0 -
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.Reed0 -
excellent point.
Very glad I called in the wisdom of the forum0 -
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 purchase0 -
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 it0 -
18cc, I don't understand how this would work. Could you give it me in laymans?0
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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?0 -
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.0 -
I think that would be less clear, as my potential 40k would be converted to 20% value of the property, which would (hopefully) rise through the years, making it a worthwhile investment for me0
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