Buying a property for less than market value

[quofan]

Hope someone can help, before I spend exhorbitant fees on lawyers!! My in-laws still owe �44000 on their house, worth �150k, but still have 7 years left on a mortgage - to age 65. The father in law is now ill and unable to work much longer, they might then lose their house. Is it possible for me and my wife (the only child) to purchase the house from them for the outstanding mortgage (ie 44000) and they can then the live in their house. As she is the only child, it would eventually go to her anyway. Is this possible or not?? Any advice much appreciated.

[whyme]

quofan, I read in the paper yesterday, that Paul Burrell, remember him Diana's so called "Rock" had bought his neighbours house in a private deal, meaning no estate agents would be involved, so no fees!! Maybe a good idea would be to go see with your father in law the bank who he has the mortgage with and let them give you advice.

[strobe70]

surely if you have the cash then it's just a case of paying off the mortgage early or just making the payments on their behalf for the next seven years if you don't have the cash up front.

[Mrs_Pegasus]

Depends if the deeds will be changed to reflect your contribution. If they are then there may be tax implications if your FIL dies within 7 years. I am not 100% sure of it but I would take a look at the inland revenue site.

[WoWo]

You can pay whatever you like for a house, however if the Inland Revenue see it as being done for tax avoidance purposes (stamp duty in this case) then they would charge stamp duty on the market value (whatever that might mean).

In your case I doubt this would be a problem, firstly because you wouldn't be doing it for avoidence purposes and secondly the market value would be close to being under the lower stamp duty threashold anyway.

I think you need to see a solicitor who would be able to advise on the best way to proceed. Things will depend on if you will be getting a mortgage for the �44k

[yerbamate]

Advice from one who has been there and got burned is, DON'T DO IT!.

[themas]

If you own the house and don't live in it, you will be liable for Capital Gains Tax when it is eventually sold. If your in laws give it to you or sell it to you at below market price and then go on living in it without paying you a market rent it is deemed to be a gift with reservation for Inheritance Tax purposes and would be included in their estate on death. Whether this would matter depends on what other assets they have, because the value (�150K) is well below the IHT threshold of �285K.