House swop - financial advice

DeVlaeminck
DeVlaeminck Posts: 9,108
in The cake stop
Best way of doing this? Will a conveyancing solicitor be able to advise or should I be seeking independent financial advice? Financial planning is not my thing.

Situation is my mum has moved into a bungalow and is gifting her house to her surviving sons - ie. me and 2 brothers.

I'm giving my house to brother 3 and he is selling a house he current rents out to pay 1/3rd of the value of my mum's house to brother 1. I'm aware there will be stamp duty to pay and possible death duties if my mum or maybe one of us dies within 7 years - just looking at the fairest way of doing it without one person incurring a greater financial risk.





[Castle Donington Ladies FC - going up in '22]

Comments

  • surrey_commuter
    surrey_commuter Posts: 18,867
    DeVlaeminck said:

    Best way of doing this? Will a conveyancing solicitor be able to advise or should I be seeking independent financial advice? Financial planning is not my thing.

    Situation is my mum has moved into a bungalow and is gifting her house to her surviving sons - ie. me and 2 brothers.

    I'm giving my house to brother 3 and he is selling a house he current rents out to pay 1/3rd of the value of my mum's house to brother 1. I'm aware there will be stamp duty to pay and possible death duties if my mum or maybe one of us dies within 7 years - just looking at the fairest way of doing it without one person incurring a greater financial risk.





    For the life of me I can not understand what you are doing in the second para. Why is bro 3 paying bro 1 a third of the value of mums house?

    Consider an accountant as well as IFA. Taxman will want all transactions done at market value. SDLT on a second property is a lot more.

    Congratulations on acquiring a holiday home
  • pblakeney
    pblakeney Posts: 27,484
    Just for clarification.
    Brother 1 gets 1/3 share of Mum's house.
    Brother 3 gets your house.
    You get Mum's house.
    ????
    The above may be fact, or fiction, I may be serious, I may be jesting.
    I am not sure. You have no chance.
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  • elbowloh
    elbowloh Posts: 7,078
    Who's on third?
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  • Dorset_Boy
    Dorset_Boy Posts: 7,610
    It's all legal work so a solicitor to do the various legal contracts and conveyancing.
    A financial adviser would only be needed if there was a mortgage involved.
  • orraloon
    orraloon Posts: 13,268
    Are all parties on board, happy with arrangements and not the sort who might choose to screw over a relative?
  • TheBigBean
    TheBigBean Posts: 22,024
    I presumed he was gifting his 1/3 share.

    There's no stamp duty on a gift.
  • veronese68
    veronese68 Posts: 27,865
    edited May 2021
    I may be reading too much into this but I took it that deV is moving in to his mum's old place. His house is worth 2/3 of the value. DeV gives that to bro 3 and gets the old dear's gaff. Bro1 is out at this point so bro 3 gives bro 1 the value of his share. They all get 1/3 of the value.
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  • pblakeney
    pblakeney Posts: 27,484
    edited May 2021
    veronese68 said:

    I may be reading too much into this but I took it that deV is moving in to his mum's old place. His house is worth 2/3 of the value. DeV gives that to bro 3 and gets the old dear's gaff. Bro1 is out at this point so bro 3 gives bro 1 the value of his share. They all get 1/3 of the value.

    That was my interpretation.
    All gifts so no tax as long as 7 years is maintained and legal paperwork completed.
    Seven years is the biggie as DeV could be hit hard.
    The above may be fact, or fiction, I may be serious, I may be jesting.
    I am not sure. You have no chance.
    Veronese68 wrote:
    PB is the most sensible person on here.
  • elbowloh
    elbowloh Posts: 7,078
    Bro 3 could technically ask bro 1 for monies equivalent to a third share of the rental income of the mums house.
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  • DeVlaeminck
    DeVlaeminck Posts: 9,108
    pblakeney said:

    Just for clarification.
    Brother 1 gets 1/3 share of Mum's house.
    Brother 3 gets your house.
    You get Mum's house.
    ????


    Yes.
    [Castle Donington Ladies FC - going up in '22]
  • surrey_commuter
    surrey_commuter Posts: 18,867
    elbowloh said:

    Bro 3 could technically ask bro 1 for monies equivalent to a third share of the rental income of the mums house.

    With no emotional attachment the easy thing to do would be to sell the house and distribute the net proceeds equally.
  • DeVlaeminck
    DeVlaeminck Posts: 9,108
    veronese68 said:

    I may be reading too much into this but I took it that deV is moving in to his mum's old place. His house is worth 2/3 of the value. DeV gives that to bro 3 and gets the old dear's gaff. Bro1 is out at this point so bro 3 gives bro 1 the value of his share. They all get 1/3 of the value.

    Yes it's a nice house and if I'm being gifted 1/3rd I can afford it by selling mine - probably - I only have estate agents valuations of mine.

    My older brother lives in Canterbury and has a nice house so he'd want the money.

    My younger bro lives at my mum's since he returned to the UK last year and he would get my house which is worth about 2/3rds if my mum's and give my older bro his share.

    My main concern would be getting hit for 40% of the entire value of my mum's house if she died rather than 40% of 1/3rd of it - Ive paid off my mortgage and don't really want to take out another for 100k tax bill.
    [Castle Donington Ladies FC - going up in '22]
  • DeVlaeminck
    DeVlaeminck Posts: 9,108
    Mine has been valued at 270-300 by 2 estate agents - I would be happy with 260-70 - my mum's has a probate valuation of 310k about 6 months ago but an estate agent would probably value it 340+ .



    [Castle Donington Ladies FC - going up in '22]
  • TheBigBean
    TheBigBean Posts: 22,024
    You would need to get proper advice from a property lawyer, but I would imagine you can get a single contract that all parties sign that formalises all the transactions. In this way, your mother would gift it to her three children, and then the shares would instaneously be sold on as you desribe. All the steps would then be on the land registry.

    Potential IHT liability would then be shared as all three children inherited it. There would be no stamp duty on the gift from your mother, but there would be on the exchange between you and your brother.
  • DeVlaeminck
    DeVlaeminck Posts: 9,108
    Thanks BB - going to phone a solicitor on Monday but that's the kind of thing that I would be hoping for.
    [Castle Donington Ladies FC - going up in '22]
  • briantrumpet
    briantrumpet Posts: 20,698
    I might be wrong, but from the sums involved, I don't think inheritance tax will come into play, especially if your father died and left everything to your mum (apologies if I'm misreading). Basically the IHT will be both of theirs added together, so in the £900k region, I think, as things stand, before TBB changes the entire taxation system.
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  • DeVlaeminck
    DeVlaeminck Posts: 9,108
    Yes take your point I agree that might be very relevant I'll make sure I take that information with me to the solicitor.
    [Castle Donington Ladies FC - going up in '22]
  • surrey_commuter
    surrey_commuter Posts: 18,867
    DeVlaeminck said:

    Yes take your point I agree that might be very relevant I'll make sure I take that information with me to the solicitor.

    In case she ends up in a care home you may want to check out the rules on what I think are called deprivation of assets

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