Loan agreement/ charge on property

[tootaxing]

My mother is moving to be closer to us in her final years, she is 80, and my sister and I will be lending her approx 70% of the purchase price in unequal shares.

We would like to get back at least our initial loan and a proportion of any increase if the proprty is sold.

1. is it possinle to draw up such an agreement?
2. what are the tax implications?
3. is a charge on the property the best way to protect our interests?
4. can a charge on a property be proportional rather than a monetary value? would this negate the need for a loan agreement?
5. can we charge interest to cover the lost interest on the money we are lending? understand this would attract income tax, but so does the interest we get now.

[bd6759]

1. Yes

2. Depends on the agreement and who will own the property. If you are to benefit from the increased value it can be argued that you have a beneficial interest in it. This has SDLT and CGT issues. Might be worth considering asking your mother to will the property to you and your sister in the same unequal shares. You then inherit the property at its increased value.

3 Yes, especially if you don't trust your mother or sister. Otherwise the agreement will suffice.

4. As 3

5. You want to charge your mother interest and receive the increase in value?

You should speak with a tax advisor to structure this efficiently.