Buying a holiday home with parents

[hoolw]

My parents and I love a particular holiday destination. Parents are in their early 60s and retired. DP and I are in our late 20s.

We have found a gorgeous holiday villa for £500,000 in another country. Parents can’t afford it on their own, but we could go halves.

Parents have suggested that we buy together under an irrevocable trust that would leave their half of the villa to me after their death. This has been looked at my a local lawyer and approved.

Realistically, we’d spend no more than 3 weeks a year there. Parents would spend around 8 weeks a year there but with the understanding that they would do a lot of the logistics with upkeep. We would rent it out for a couple of months a year which should pay the upkeep costs.

Yes it would be cheaper to just rent somewhere when we need but we need security of a home in another country. Has anyone done similar?

At your age it's a big financial commitment for only spending 3 weeks a year there. Do you own a property that you actually live in?

Have you also looked into all the tax implications of renting out the property plus what is needed to get a tourist licence for the rental?

we need security of a home in another country

Do you? Why? Your OP is about having a holiday home that you'll use for a few weeks a year - that's a 'want' rather than a need. So what makes it a 'need'?

I really wouldn't do this, unless you are extremely well off and likely to stay that way. Tying up your capital and mortgage capacity so young will limit your options in all kinds of ways as your lives go on. And what if you and DP split up - will DP want to continue co-owning with his ex's parents, and will they want him to inherit their share of the property?
Surely your parents can find a cheaper property and buy on their own.

What would happen should you and your DP separate? And your DP want their share of investment returned. ? And you left managing on a single income for housing and costs etc?

What country is it? If it is Europe? Are you EU citizens? I believe Spain is making it difficult and expensive there for non-EU second home owners and there are comments that France may do something along those lines too.

Bad idea.

Just do a sum. How many villas could you stay in for how many years for the cost of the villa you want to buy?

That’s a huge amount of money for just 3 weeks a year. I wouldn’t do it.

Figures are not the actual cost - just indicative. We are in London too so it’s all relative

Do you have the cash to go halves or are you looking at borrowing in addition to your mortgage at home? Things are expensive for second home owners, extra stamp duty, mortgage rates can be higher, lots of these things don't even if the second home is abroad in summer circumstances you're UK home will be considered the second residence. Do you own your UK home outright do you plan on selling/buying at any point in the next 5-10 years?

You are subsiding your DP’s holidays! No way would I do this. All too complicated. What happens if they want to fo when you want to go? Are they going to use it in prime season and how much rental income
will you still have? Who deals with handover, cleaning between guests etx. Who pays for major repairs, insurance, agent fees?

You are basically going to run a mini business with your parents and you both want to use it for holidays. Unless you get on exceptionally well I can’t see this working out.

So many things could go wrong … and all this for three weeks a year! Get your parents to check out long term winter rentals in the sun, you can often get them dirt cheap! A friend of mine heads to Portugal every Nov/Dec … not super hot but blue skies and very affordable off peak

Where is the location? This determines a lot of the factors of taxes, accessibility, wills, utilities etc.
It seems a nice dream but reality is totally different?

To add to my pp: Do you really love it so much that you want to spend most of your holidays there every year?!

there is a certain place abroad that I love (and I am a citizen of that country), and a small place by the sea would be €100k. I still don’t want the responsibility of owning a place abroad and feeling like I had to go there all the time.

What has living in London got to do with it?

Check your UK tax position. You can't take the overseas lawyer's advice as gospel unless they have specific knowledge of UK and whichever country's inheritance reciprocal taxation laws. If you get it wrong, you run the risk of having to sell to pay the tax.

Is your income enough to cover 50% of maintenance, insurance, utilities, repairs after holidaymakers leave it in a mess, staff to do rental. changeovers etc etc

This is a crazy idea - if your folks “need” to own somewhere as opposed to just renting a similar property let them crack on

but we need security of a home in another country.

Why?

For 3 weeks per year and their 8 no I wouldn’t bother. It’s a bit different if they were say spending 6 months out of 12 there but they aren’t
plus how would it work if you got divorced. Just a big old mess

Are you buying your own home here? Have you got kids / planning (more) kids and likely to need your own bigger home over the next 10 years?

Can you afford big maintenance bills, a new boiler / roof / rendering and painting etc for an overseas property?

What are the country’s laws about selling and taking money out of the country? In my Dp’s family country, a favourite holiday destination, they will now allow foreigners to buy property but there are major restrictions on selling, the equivalent of Capital Gains tax, a cap on the amount of money that can be removed from the country rather than re-invested etc.

Owning a share of a holiday property somewhere lovely sounds idyllic but potentially very very expensive overall.

You need to check carefully what the death duties would be.