Buying my parents’ house: can they sell their property to me and my husband at a reduced price so we can make an income from it?

Question: My parents want to sell their house and buy a retirement village flat. They’ve offered the house to me and my husband at a reduced price and say we could use it as a buy to let.

Are there likely to be any issues for us if we buy from them? 

Answer: The difference between the price you and your husband pay your parents for the house and its market value could be deemed to be a gift from them.

It would be advisable for you to get an independent valuation of the house from a Royal Institution of Chartered Surveyors member. 

I do not know how old your parents are but it is important that both of them have full capacity and understand what they are doing, and that they obtain independent legal advice in regard to the proposed transaction which would be at an under value.

Do remember that there may be inheritance tax and stamp duty liabilities, and that receipt of a lump sum of money may have consequences in the future for your parents should they ever need to apply for state benefits.

You could just buy a share in your parents’ house and then let out the jointly owned property to earn an income for both you and them.

These answers can only be a very brief commentary on the issues raised and should not be relied on as legal advice. No liability is accepted for such reliance. If you have similar issues, you should obtain advice from a solicitor.

If you have a question for Fiona McNulty, email or write to Legal Solutions, Homes & Property, Evening Standard, 2 Derry Street, W8 5EE. Questions cannot be answered individually, but we will try to feature them here.

Fiona McNulty is a solicitor specialising in residential property.

Source link

Share on FacebookTweet about this on TwitterEmail this to someoneShare on LinkedInShare on Google+Pin on Pinterest