Buying a house for a family member to live in
Buying a house for a family member to live in can help you provide your relative with secure housing and offer them the opportunity to build financial security. However, there are a few considerations that you should take into account when making this decision…
Can you buy a house for a family member to live in?
Yes, it is possible to buy a house for a family member to live in. However, there are several factors you need to consider such as:
● the purpose of the purchase
● the type of ownership structure you will use
● potential tax implications
It may also be helpful to speak with a legal or financial professional to understand any additional implications of buying a property for a family member.
Tax rules when buying property for a relative to live in
If you are considering buying a property for a relative to live in, it's vital to be aware of the tax implications:
● Stamp Duty Land Tax (SDLT)
When buying a property, SDLT may be payable at varying rates depending on its purchase price. However, if the property is intended to be the main residence of a dependent relative, the property can be treated as a 'replacement' for their previous main residence. In this instance, SDLT may not be due or it may even be payable at a reduced rate.
● Inheritance Tax (IHT)
If you make a gift of property to a relative, you could be liable to pay IHT if you die within 7 years of the transfer.
● Capital Gains Tax (CGT)
If you sell the property in the future, you may be liable for CGT on any profit made on the sale. If the property is considered the main residence of your relative, however, you may be exempt.
● Rental Income
If your relative is paying rent to live in the property, you may have to pay income tax on the rental income received.
Can I buy a house and let someone live in it for free?
Yes, but you’ll need to make sure that any agreement between you and the person living in the property is documented correctly. There needs to be no confusion over who owns the property or who is responsible for repairs and maintenance, for example.
In addition, if the person living in the property is not contributing financially, you may need to consider how this will impact the equity of the property. Keep in mind that if the property is jointly owned, there could be implications down the road if one party wants to sell.
Buying a house for a family member to live in can be an incredibly rewarding experience but it’s important to make sure that you consider all of the relevant factors before making your decision.
If want to know the value of your property before renting or moving in a family member, then get started by booking a free valuation with us today.
Or for advice, Call 01843 222701 or email client.services@oakwoodhomes.biz.