House Deposit

[xxlisa]

I'm looking to purchase a house of my nan. The house has been valued at 160k but she's willing to sell to me for 130K. Will this 30K difference be classed as a contribution towards my deposit?

[murraymints]

Wouldn't think so...the selling price has just been lowered !

[bednobs]

if you mean for mortgage purposes, no. You will however be able to have a better loan to value ratio

[johnny37]

You should get your nan to put your name on the deeds saying you own 19% of the house (£30000). Might be better to make it a nice round 20%. You should then be able to get a mortgage to purchase the remaining balance from your nan. The lender will value the house to make sure it is worth £160000. You will also have to prove you can afford the repayments. I should think the lender would be quite happy to lend £130k on a house worth £160k.

[atalanta]

In some circumstances, gifts are taxable. You had better make sure you understand any tax liability before the sale goes through, or you could get a nasty shock. Especially if your grandmother dies within 7 years and the "gift" counts as part of her estate for inheritance tax purposes.

[Peter Pedant]

NO, the answer to your question is certainly not

[why did you think it would ?]

and classed by whom ?

Where by the way is your gran gonna live ? YOu have written a house of my nan, so it is possible that it will be one of the other houses she has.

bUT if she continues to live in it, EVEN if she pays a market rent for being allowed to live in it, there is a clear reservation of benefit on the facts given - specifically that she has knocked off £30 000.

The tax position of under the market price sale of a house to a relative is such that you need to (pay for) tax advice to avoid Her being taxed n the transfer and you being taxed as well.

[johnny37]

Lisa, my solution will work but as mentioned by others there may be other issues you and your nan need to consider. You need to talk to a trusted solicitor who is an expert in property transfers. I believe an initial consultatiion is relatively modest.

[Peter Pedant]

Even 1% of the asking price is £1300 and this is definitely worth paying for decent tax advice.

the categories that need to be covered and you can google all of them,
are: sale at below market price to a relative,
reservation of benefit

you also have to charge a market rent to her if she stays.


JOhnny is clearly implying that he knows it works {because he has done It himself] however it depends on what the tax rules were when he did it. It would certainly transfer title but you dont want a bl++dy great avoidable tax bill along with it.

[xxlisa]

Nan is going to live with my auntie as she can't really live on her own any more. My partner and I have been looking to buy a house so it just seemed logical to buy the house from my nan.
Estate agent has valued the house but our budget was 130.
I just wondered if we would get a better rate on our mortgage for borrowing less than the property value (the bank would be winning should it get repossessed)