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Aston Lawyer
Aston Lawyer, Solicitor
Category: Law
Satisfied Customers: 10772
Experience:  Solicitor LLB (Hons) 23 years of experience in Conveyancing and Property Law
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Madam, My Nan and Grandad are struggling financially

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Dear Sir/Madam,
My Nan and Grandad are struggling financially and are facing having to sell their home and downsize in order to continue to be able to afford to live.
My uncle's (their sons) have been giving them money for the past few years but have now decided enough is enough. I have come up with a suggestion which I would like to know the potential pit falls of if that is possible. My suggestion was to purchase the house at a heavily reduced rate (the house is worth around £280000 and my offer would be around the £25000 mark) and then pay my grandparents £300 per month (either in the form of a loan or gift to help with the running of the house) until both passed away.
At that time the house would be mine entirely to do with what I wished. I have already agreed with my grandparents that I would pay back the money to my Uncle's that is owed to them along with around £5000 each. I am the only person in my family in the position to help and have the backing of the extended family. They understand that they I would likely be making a profit in the long run but they do not want my grandparents to have to move out and buy a new home at their stage of life.
Could you please let me know what potential problems this plan would have and how we could go about ensuring the deal was 100% legal and above board. I understand that the 7 year rule would apply if one or both of them should pass but would I receive an inheritance tax bill if the estate was under the tax free threshold? The estate is only the house and around £10000 in cash and other assets.
I have also read about the possibility of a capital gains tax bill if I decided to sell the house after they had both passed. Again, how would this work and how do I go about ensuring documenting things correctly so as to pay the correct amount of tax.
Yours sincerely,
Jack Doyle

Hello and thanks for using Just Answer.

My name is ***** ***** am happy to assist you with your enquiry.

Could you confirm if you would need to raise a Mortgage on your Grandparents property in order to buy it for £250,000?

I look forward to hearing from you.


Customer: replied 2 years ago.
Hi Al,
No I would not need a mortgage as I have the capital available to me. It would be 25 thousand not 250. I understand all the taxes (stamp duty etc) would be based on the market value of the house and can cover that as well.

Hi Jack,

Thanks fo ryour reply- sorry for the typo!

I am glad you don't need a Mortggae as that would scupper things totally.

Right, the way forward would be-

1. You would need to grant your Grandparents a "Lease for Life", meaning they could remain living in the property until the survivor of them die/decide to vacate permanently.

2. You also need to grant your Grandparents a private Charge (like a Mortgage) setting out the terms on which you intend to repay your Grandparents the additional monies/ confirming the monthly payment of £300.

You and your Grandparents will need to instruct separate Solicitors for the above.

As rgeards Inheritance Tax, this will only be a factor if your Grandparents joint estates come to more than £650,000 (to include the full value of the property). If it did (which I don't think it will!), the full value of the property may be taken into account, as the transfer to you may be seen by HM Revenue & Customs as a "gift with a reservation" (ie your grandparents have sold their property to you at an undervalue, but have retianed a benefit in it, by remaining living there). The full value of any asset deemed to be the subject of a gift with a reservation is taken into acoc**t upon the parties death even if the transfer was made over 7 years ago. As I have said, I don't think this will be an issue, unless your Grandparents subsequently win th elottery!

As rgeards the Capital Gains tax position, on the basis that you own your own home, you will be deemed to acquire your Grandparents property at the market value. You should thereofr eget a professional valuation from a Surveyor. Then, as and when the property is sold, you would be liable for CGT on any profit made, subject to your annual exemption. You should discuss this with your Accountant, please.

I hope this assists and set sout the legal position.

If i have helped, I would be grateful if you could rate my answer.

Kind Regards


Customer: replied 2 years ago.
That is great thank you, ***** ***** just ask if I didn't have my own home what would the position be with regards ***** ***** gains tax then?
Many thanks,

Hi Jack,

I'm not an Accountant, but you don’t pay CGT when you sell your home if all of the following apply:

  • you have one home and you’ve lived in it as your main home for all the time you’ve owned it
  • you haven’t let part of it out - this doesn’t include having a single lodger
  • you haven’t used part of it for business only
  • the grounds, including all buildings, are less than 5,000 square metres (just over an acre) in total
  • you didn’t buy it just to make a gain

You are therefore going to be liable for CGT, on the basis that either you won't be living there or you acquired the property on the basis that you would make a gain.

I hope this assists.

Kind Regards


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