11:33 AM, 27th January 2021, About 10 months ago 1
I think the initial part of this plan sounds like a relatively straight forward proposition, but the second buyback part probably not… so, I hope the good people of P118 can point me in the right direction!
I’m living in a property that still has a mortgage, but with a sizeable chunk of equity in it. My mother (who is semi-retired) has a larger property with a large chunk of equity in it too. This will attract stamp duty but mine will not. Both properties are in Scotland.
My wife and I would like to buy my mother’s house at market value on a concessionary purchase mortgage where she gifts the equity to us. She would like to buy my smaller property – directly from me – on a similar concessionary purchase mortgage where my equity is gifted to her.
But… in two years time – after her mortgage deal has expired – I want to buy back the house from her on a new BTL concessionary purchase mortgage, then let the property to her but within a connected tenant framework – I would claim no profit or loss on the property.
I’m aware of the second home tax on the repurchase as I have another three BTL properties – these are not incorporated.
Q1: Is it correct to assume that the initial private vice versa residential sale wouldn’t attract the second home tax?
Q2: Is the connected tenant proposition totally legal directly after I buy back the property from my mother?
Q3: could there be any unforeseen IHT issues if my mother is taken into care further down the line?
I look forward to hearing your comments and thank you for providing such a fantastic resource for so many years!
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