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Where Taxpayers and Advisers Meet

Purchasing a percentage of parents house

cazwilliams
Posts:2
Joined:Sat Aug 03, 2019 3:00 pm
Purchasing a percentage of parents house

Postby cazwilliams » Sat Aug 03, 2019 3:33 pm

For the last 7 years I have been living with my mother as her primary carer in the house she has lived in for 65 years (and in which I was born).

Unfortunately my mother is now bed bound and also has advanced dementia / alzheimers so caring for her at home and keeping her safe will not be possible for much longer.

In order to free up some equity for her care without selling the house (and leaving me homeless) I am considering buying a percentage of the house, which is worth approx £300,000. I do not require a mortgage as I have the equity from selling my own house when I moved in with her

My questions are:

Can I legally buy a percentage of the house? I would get the house valued properly at fair market value

Would my mum pay any taxes on this sale?

I have 4 siblings, none of whom live in the property, and all are in agreement with this course of action. My mum's will leaves everything split 5 ways between us.
If the house is sold immediately after she passes away, am I liable for capital gains tax at this point?
What tax considerations would there be If we agree to keep the house and I continue to live in it for a significant period of time after she passes away?

I will not require a mortgage as I have the equity from selling my own house when I moved in with her.
I would get the house valued properly at fair market value.
We would each have our own independent solicitors.
Although mum has always said she wants the house to stay in the family she is no longer capable of making an informed decision.
I do not have LPA for finances, but 2 siblings do so can act on her behalf.

Are there any pitfalls/things to avoid with this. or must/must'n't do's? I would welcome any answers to my questions or general advice.

Thanks

Jerome_Lane
Posts:25
Joined:Mon Jul 22, 2019 10:13 am
Location:Camberley, Surrey
Contact:

Re: Purchasing a percentage of parents house

Postby Jerome_Lane » Mon Aug 05, 2019 9:48 am

I suggest you get full advice on this but your mum won't pay any CGT if its always been her main home. It sounds like you might be in a position to just buy the house outright and come to arrangement with your siblings to ensure care and financial arrangements are dealt with so all is done fair.
Although the house would benefit from a CGT uplift on your mums death, you would not be liable to CGT on the sale of the house if you've always lived in it as your main home during your period of ownership.
I wish you all the best and hope your mums final days are happy ones.
Jerome Lane
Tax Advisor
jerome.lane@stewartco.co.uk
Stewart&Co.
Chartered Accountants
Telephone: 01276 61203

cazwilliams
Posts:2
Joined:Sat Aug 03, 2019 3:00 pm

Re: Purchasing a percentage of parents house

Postby cazwilliams » Mon Aug 05, 2019 11:38 am

Thanks very much for the advice re CGT,

unfortunately, having moved from Scotland to South East England there is a huge difference in property prices so I'm not in a position to buy the house outright but can buy a big enough percentage to make sure Mum is cared for properly.

Would any Stamp Duty be due to be paid if I already live in the house but am only buying a percentage?

Thanks again

Jerome_Lane
Posts:25
Joined:Mon Jul 22, 2019 10:13 am
Location:Camberley, Surrey
Contact:

Re: Purchasing a percentage of parents house

Postby Jerome_Lane » Mon Aug 05, 2019 12:06 pm

You won't pay SDLT if this is your only property and the chargeable consideration (what you pay) is less than £125,000.

You will be buying something you are due to inherit a fifth of after you appear to have made a sacrifice to care for your mother over the last 7 years. The inheritance won't necessarily be equal in a third parties eyes.

Conversely, a lesser interest in a house has a lower market value than you might equitably expect due to the lack of control.

You should take advice as if care costs escalate, the house will have to be sold if this is the only asset and you'll be back to square one. If house prices take a dip, you could be worse off.

This is actually more complicated than it at first seems, hence the need to think carefully about how you achieve this.

If you live in the property after inheriting, there won't be any direct tax consequences, although your siblings might force a sale or expect rent.
Jerome Lane
Tax Advisor
jerome.lane@stewartco.co.uk
Stewart&Co.
Chartered Accountants
Telephone: 01276 61203


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