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How old is FiL?
Because the series of smaller payments might be a better idea. Is he going to be alive long enough to spend £211,000, or is it going it come back to daughter minus a huge chunk of IHT?
Perhaps simply paying the FiL a monthly amount to cover repaying the house over an agreed timeframe. I'm sure some hoops would need to be jumped through to ensure the HM Revenue and Customs don't see this as rent payments and a blatant IHT dodge.
bq-
50 something. Yeah he's in good nick. I suspect though that it'll come back to children in the long run through inheritance minus IHT.
He basically has a spare house. BiL wants to buy it. Couldn't at the time so FiL borrowed money to buy it and take it off the market. FiL doesn't want a mortgage on his own property so wants the 200k back in due course. Is relatively flexible about how long it takes but come October his interest only loan is going to double repayment price (introductory 2 year offer).
Trying to figure out what the most cost effective solution is for BiL. He can afford mortgage repayments but is struggling to get one in the first place and having a 'bad' year won't make that easier.
Can also, due to the lump sum nature of his work, probably afford IHT and CGT so that's not the problem, the issue is getting a mortgage.
Would owning a property worth 260k make it easier for someone to borrow 190k? And are there stipulations from lenders on what that money has to be spent on and do they check? :)
Magnets etc.
CYOA
My brother in law is self employed and wants to buy a house with his wife. His last year SA302 had about 30k on it. This year it could be similar but he bought a lot of equipment and his accountant is suggesting he claims for it all so he'd on paper have a bad year but get a tax rebate of like 5 grand or something.
My father in law owns a house as a non primary residence that my brother in law wants to buy from him. Was purchased for 200,000 a couple of years ago, now valued at 260,000. Currently there are no loans against the property (father in law took out an interest only loan against his a portion of his main residence to buy additional place).
BIL is unsure whether to have a 'bad' year' and get cash short term or struggle to find cash to pay tax (due to poor planning) and have a 'good year' so it's easier for lenders but harder for him for the next few months.
An option FiL suggested is he signs over the deed to BiL as a gift. He would be fine for inheritance tax stings so long as FiL survives 7 years. FiL would have to pay capital gains tax of between 7 and 11 grand.
In total BiL would have to pay 211,000 to FiL.
None of us are sure how stamp duty factors in.
Assuming house now worth 260k, how easy would it be to borrow 211k against the house he owned to pay back FiL? Or technically more like 190k as BiL has some savings?
An option i suggested is for BiL to out smaller loans of say 80k on the property and stagger repayments to FiL i.e. FiL signs over property to BiL as gift, BiL takes out a relatively small sum of c80k (for home improvements or some such), gives it FiL to reduce FiLs loan amount, BiL makes loan repayments. Once square with lender, repeat etc
Is that even legal?
Magnets?