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Ask Clare Your Own Question
Clare
Clare, Solicitor
Category: Law
Satisfied Customers: 34589
Experience:  I have been a solicitor in High Street Practice since 1985 with a wide general experience.
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My daughter who is married has just had her third child and

Resolved Question:

My daughter who is married has just had her third child and is struggling to find accommodation with security of tenure. I am proposing to "sell" them my house for perhaps one third of the market value as that is all they can afford to pay for a loan. This is to provide a suitable sized home for the three children to grow up in. To ensure that the house is secure does it make sense to "sell" it or could it be put in a trust for the children somehow and the parents pay a rental to the trust the equivalent to their mortgage payment. The house would be mortgage free on completion of transaction.
Submitted: 3 years ago.
Category: Law
Expert:  Clare replied 3 years ago.
Hi
Thank you for your question.
My name is Clare
I will do my best to help you but I need some further information first.
How much is the property worth and where will you live?
Clare
Customer: replied 3 years ago.

property worth about £550k - I live in St. Agnes, Cornwall

Expert:  Clare replied 3 years ago.
Hi
Sorry - will you remain living in the property or not?
Clare
Customer: replied 3 years ago.

No

Expert:  Clare replied 3 years ago.
Hi
Do you have any concerns about Inheritance tax or have you taken that into account?
Would you rather give the property to your daughter or the grandchildren?
Clare
Customer: replied 3 years ago.

The idea is to reduce inheritance tax liability possibly by selling them a half share of the property. then my daughter would inherit it.

Expert:  Clare replied 3 years ago.
Hi
That is fine - may I ask how much the rest of your estate is worth?
Clare
Customer: replied 3 years ago.
Why is that relevant? Certainly enough to attract inheritance tax
Expert:  Clare replied 3 years ago.
Hi
The house itself will do that - which is why I was hoping to try and calculate how much you need to cover to achieve your aim
Clare
Customer: replied 3 years ago.

I am proposing to sell them half to reduce inheritance tax and get enough to move elsewhere.

Expert:  Clare replied 3 years ago.
Hi
Can they raise a mortgage?
Clare
Customer: replied 3 years ago.
A private interest only mortgage for 150k and about 20 deposit
Expert:  Clare replied 3 years ago.
Hi
Working the matter through.
I have to ask - are you a widower, and will you have sufficient funds for your remaining years if you sell at the reduced price.
This information helps me give you the best options
Clare
Customer: replied 3 years ago.
I married 3 years ago and we're pooling resources for a house.
Expert:  Clare replied 3 years ago.
Hi
Excellent news - but i still need to know if you were widowed as it would potentially give you access to a larger nil rate tax band
Clare
Customer: replied 3 years ago.

I married for the first time three years ago

Expert:  Clare replied 3 years ago.
Hi
Thank you.
Allowing your daughter to "buy into" the property by way of a private mortgage is indeed an excellent way of reducing your Inheritance Tax liability at the same time as securing the housing needs of your grand children
I have assumed that the "loan" is likely to come from you - do please ensure that it is properly documented.
You will need to consider whether you intend to sell to your daughter alone - or to her and her husband - if the later you may wish to add a proviso that the discount you are giving for half of the equity is dependent on your daughter remaining living in the property and that if she does not do so then the "balance" will be repayable to you/your estate
You could set up a trust so that the property is held on trust for your grandchildren - but this could leave your daughter in a difficult position in the future when the children are adults - limiting her in her housing choices.
It could also be an expensive option.
I hope that this is of assistance - please ask if you need further details
Clare
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