| son buying parents house [message #390478] |
Do, 25 Mai 2006 00:45 |
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Hi I wonder if this idea I have is feasible and or legal. Scottish law would
apply as we live in Scotland.
My son could afford to pay me £600 per month and as we (his parents) will
shortly need money when we retire I thought of selling my son our house for
£600 per month for the rest of our lives. No deposit just £600 per month
with the condition that we stay in the house until we die. He will then get
the house. He would get it anyway when we die as he is our only son. At the
moment he is unmarried and has no children. As we live in Scotland he would
probably let the house when we die as he has his own house in England.
If we live for another 25 years, the house, at present worth £120,000, would
have cost him £180,000, which is substantially less than it would cost if he
bought the house with a mortgage. Plus he would also get any savings we had
but since his mother and I want to go to the sun every winter there might be
none left.
We could also make allowances for inflation, i.e. maybe increase the payment
by the rate of inflation every 5 years.
So is this a good idea and what are the pitfalls?
Thanks Mark
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| Re: son buying parents house [message #390482 ] |
Do, 25 Mai 2006 07:49 |
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What is the main objective behind this ?
1=2E To avoid Inheritance Tax ? [property valued at =A3120K, so probably
not]
2=2E To ensure that your son dosen't take your house, then decide to stop
paying off the loan on the house.
What you suggests sounds feasible - i.e. you 'sell' him the house, and
get an IOU in exchange.
In this case, I think you really need to speak to a solicitor first.
They should be able to draft an agreement that does what you want, and
is legally binding upon him.
Neil.
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| Re: son buying parents house [message #390498 ] |
Do, 25 Mai 2006 13:27 |
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Perfectly feasible, don't bother with solicitors except to make out your
wills.
"Mark" <mark.mrobertson [at] gmail.com> wrote in message
news:km5dg.75173$wl.7849 [at] text.news.blueyonder.co.uk...
| Hi I wonder if this idea I have is feasible and or legal. Scottish law
would
| apply as we live in Scotland.
|
| My son could afford to pay me £600 per month and as we (his parents) will
| shortly need money when we retire I thought of selling my son our house
for
| £600 per month for the rest of our lives. No deposit just £600 per month
| with the condition that we stay in the house until we die. He will then
get
| the house. He would get it anyway when we die as he is our only son. At
the
| moment he is unmarried and has no children. As we live in Scotland he
would
| probably let the house when we die as he has his own house in England.
|
| If we live for another 25 years, the house, at present worth £120,000,
would
| have cost him £180,000, which is substantially less than it would cost if
he
| bought the house with a mortgage. Plus he would also get any savings we
had
| but since his mother and I want to go to the sun every winter there might
be
| none left.
| We could also make allowances for inflation, i.e. maybe increase the
payment
| by the rate of inflation every 5 years.
|
| So is this a good idea and what are the pitfalls?
|
| Thanks Mark
|
|
|
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| Re: son buying parents house [message #390502 ] |
Do, 25 Mai 2006 14:31 |
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The question I would want to ask is what would happen if your son
could'nt or would'nt continue to pay the rent ?
i=2Ee. he became incapacitated or unable to work, etc....
Nobody really wants to go to law with their children or family members,
but it is often the case that people can be severely let down by their
family members.
If you don't actually seriously need the money, you could always write
it off.
But if this is a situation where you would be dependent on the =A3600
p=2Em., then a formal legal agreement is probably appropriate. You could
make it a condition that he has sufficient income protection insurance
in place.
This probably sounds gloomy, and I'd probably hate to do this to my own
kids, but I have seen these informal agreements between family members
go sour so many times.=20
Neil.
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| Re: son buying parents house [message #390507 ] |
Do, 25 Mai 2006 16:05 |
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"Mark" <mark.mrobertson [at] gmail.com> wrote in message
news:km5dg.75173$wl.7849 [at] text.news.blueyonder.co.uk...
> Hi I wonder if this idea I have is feasible and or legal. Scottish law would
> apply as we live in Scotland.
>
> My son could afford to pay me £600 per month and as we (his parents) will
> shortly need money when we retire I thought of selling my son our house for
> £600 per month for the rest of our lives. No deposit just £600 per month
> with the condition that we stay in the house until we die. He will then get
> the house. He would get it anyway when we die as he is our only son.
IOW, he'd be giving you £600 a month, and ending up in exactly the same position as
if you hadn't sold it to him in this manner. I don't think you'd dodge IHT in this
way (but I could be wrong).
> At the
> moment he is unmarried and has no children.
What if he marries and has children? Would he still be able to afford £600pm then,
especially if he has to buy a bigger house for his family with the silly house prices
at the moment?
> As we live in Scotland he would
> probably let the house when we die as he has his own house in England.
>
> If we live for another 25 years, the house, at present worth £120,000, would
> have cost him £180,000, which is substantially less than it would cost if he
> bought the house with a mortgage.
But if he bought a house with a mortgage, he'd be able to live in it or rent it out.
Work out what 25 years rent would be.
> Plus he would also get any savings we had
> but since his mother and I want to go to the sun every winter there might be
> none left.
> We could also make allowances for inflation, i.e. maybe increase the payment
> by the rate of inflation every 5 years.
>
> So is this a good idea and what are the pitfalls?
It sounds like a good deal for you, but a bad one for your son financially. If he
wants to support you, why not just let him pay you £600 a month or whatever with a
promise that he'll get the house in your will?
--
Andy
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| Re: son buying parents house [message #390516 ] |
Do, 25 Mai 2006 19:28 |
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"Andy Pandy" <spam8times [at] wonderful.spam.invalid> wrote in message
news:4dlrstF1av3b2U1 [at] individual.net...
>
> "Mark" <mark.mrobertson [at] gmail.com> wrote in message
> news:km5dg.75173$wl.7849 [at] text.news.blueyonder.co.uk...
>> Hi I wonder if this idea I have is feasible and or legal. Scottish law
>> would
>> apply as we live in Scotland.
>>
>> My son could afford to pay me £600 per month and as we (his parents) will
>> shortly need money when we retire I thought of selling my son our house
>> for
>> £600 per month for the rest of our lives. No deposit just £600 per month
>> with the condition that we stay in the house until we die. He will then
>> get
>> the house. He would get it anyway when we die as he is our only son.
>
> IOW, he'd be giving you £600 a month, and ending up in exactly the same
> position as
> if you hadn't sold it to him in this manner. I don't think you'd dodge IHT
> in this
> way (but I could be wrong).
It hardly seems to matter as the family wealth is much
less then than the tax free limit.
However ISTM that this is no different to the son
lending the parents 600pm secured on the house.
When the parents die the loan is repaid out of the
estate and presumably the son would get the house
anyway.
But this latter option is much easier to document
legally..
tim
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| Re: son buying parents house [message #390524 ] |
Do, 25 Mai 2006 21:23 |
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"tim (back at home)" <tim_back_home2006 [at] yahoo.co.uk> wrote in message
news:4dm8quF1alp2lU1 [at] individual.net...
>
> "Andy Pandy" <spam8times [at] wonderful.spam.invalid> wrote in message
> news:4dlrstF1av3b2U1 [at] individual.net...
>>
>> "Mark" <mark.mrobertson [at] gmail.com> wrote in message
>> news:km5dg.75173$wl.7849 [at] text.news.blueyonder.co.uk...
>>> Hi I wonder if this idea I have is feasible and or legal. Scottish law
>>> would
>>> apply as we live in Scotland.
>>>
>>> My son could afford to pay me £600 per month and as we (his parents)
>>> will
>>> shortly need money when we retire I thought of selling my son our house
>>> for
>>> £600 per month for the rest of our lives. No deposit just £600 per month
>>> with the condition that we stay in the house until we die. He will then
>>> get
>>> the house. He would get it anyway when we die as he is our only son.
>>
>> IOW, he'd be giving you £600 a month, and ending up in exactly the same
>> position as
>> if you hadn't sold it to him in this manner. I don't think you'd dodge
>> IHT in this
>> way (but I could be wrong).
>
> It hardly seems to matter as the family wealth is much
> less then than the tax free limit.
>
> However ISTM that this is no different to the son
> lending the parents 600pm secured on the house.
> When the parents die the loan is repaid out of the
> estate and presumably the son would get the house
> anyway.
>
> But this latter option is much easier to document
> legally..
>
> tim
Hi all thanks for the input and reading through it I have come to the
conclusion that it would be a silly idea. As someone said he gets the house
anyway so why should he pay me £600 per month. I was thinking ahead to when
I or my wife might have to go into an old folks home and have to sell the
house to provide the cash and he would not get the house. I would rather he
got the house and paid for us to live it up in some old folks home than it
be sold at a loss to pay for our old age. Someone said that this does not
happen in Scotland anyway.
He does not have any money for a deposit as he has a mortgage on his own
house which still has 20 years to go. Would he be able to get a second
mortgage on a second house in any case?
My son moved to England to get a job but this was to ensure that if he ever
wanted to come back to Scotland he would have somewhere to stay. Also this
was so that he could let the house to provide him with an income when we
were gone, that way he would get his money back.
So back to the drawing board.
Thanks all, Mark
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