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Buying a house?

(2 Posts)
99percentchocolate Mon 19-Sep-16 16:19:09

A lovely, lovely friend of mine has very generously offered to buy a house for me, DP, and kids and has suggested that we rent it until she dies at which point we will inherit it from her. I've heard lots of horror stories about renting from friends and I really, really don't want anything to ruin our friendship. Instead, I've suggested that she lends us the money to buy the house outright and we then pay her back over the course of a couple of decades (so like a mortgage). That way she wouldn't be our landlady and wouldn't be responsible if anything went wrong, plus we would outright own it whilst she got a steady income back.
I've told her to consult a financial advisor as I don't want her getting into a bad situation if we misjudge anything.
So is this a really bad idea? Is it even legal? We would get a huge tax bill for borrowing such a large amount from a friend? Is there a third way which I'm missing?
Thanks in advance

kittymamma Wed 21-Sep-16 21:11:31

I have actually thought about this myself! On those days that I plan how I would spend my lottery win. I promised a friend of mine that if I win over £100 mill, I will buy her a house and a car and cover the car costs for her.

Anyway... apart from a passing interest, I have no legal expertise here at all. The way I understand it though, is you are going to be opening up yourself to inheritance tax (possibly depending on house value and the value of your friends estate at the time of death) and capital gains tax (when you sell the property) if she leaves you to inherit the property, which would mean that if she dies, you will have to cough up some money. I'm not really sure how much it would work out at, as I said, this is only a passing interest for when I win my millions.

The other option you suggest, I think would open you up to less tax to the government, but I have known lots of people lose friends over loans between friends. I think if she gave you the house now then there would be some capital gains only..

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