Buying a Relatives House

Hi Guys,

Could some one please advise me on the following issue; My father owes £XX,XXX on his house and is struggling to meet his payments, he is 65 and should really have retired by now. He is prepared to sell me the house for only the amount he owes on it. I will obviously then just let him stay and live there as he is free gratis. Is this legal? Can he sell just for what is owed? and will I incur any tax or othe financial penanlties?

Any advice is appreciated.


He can sell it to you for whatever price he likes so long as he pays of the mortgage.
If it is not your residence then you will be liable for tax on the profit if you ever choose to sell it, unless you choose to live in it for an appropriate period of time before you sell (you would need to check the small print on that)
Buying it and allowing him to lve there buckshee is entirely your choice and perfectly legal
To get around tax, can he not GIFT you the house and you in return (and separately?) GIFT him the money?

I know a property lawyer so can check for you.


Seek specialist tax advice on this, as it will cost nothing in comparison with the potential liabilities.



Also, if he owes money to everyone else, and sells his house to you at below market value, if he is subsequently declared bankrupt, the trustee in bankruptcy may come knocking on the door wanting the property back or at least a fair amount from the new owner ie you


Nothing wrong in doing this but for legal reasons & tax you must get advice on this.
Your solicitor can advise you on this better.


The property can be purchased for the amount owed.

Assuming this is lower than the open market value, a lender will likely require a deed of gift for the difference between the open market value and the purchase price, which must state, in amongst other things, that the donor (the father) will not claim any further interest in the property. If done this way there should be no requirement for a physical cash deposit.

With respect to the father remaining in the property, the lender will require him to sign a waiver to any rights in the even of repossession.

I hope that helps


I can only agree with the advice above and add the following
You will need to check about pre owned assets and your father living in what was the family home may be taxable
this will materially effect your financial status so I would look into your own affairs - will, life assurance and estate planning
make sure the solicitors and accountants are decent, paying a little extra makes the difference
good luck


blonde_guy said:
To get around tax, can he not GIFT you the house and you in return (and separately?) GIFT him the money?

I know a property lawyer so can check for you.

Interesting proposition, but I dont think it would work that way. Did you manage to speak to your property friend and find if it was possible? Tax isnt my strongest of points!

I would suspect it wont be possible to do as you suggested as HMRC (Inland Revenue) will see it as a tax evasion measure and therefore look behind it and make them pay the tax.

I also think that it wont necessarily be a good idea to do it that way, unless for example the donee (the son) never intends to sell the property and for exmaple passes it on to his children etc etc.

The reason for that being that if in the future he does intend to sell, the potential tax liability would be acquistion cost ( ie nil because he would have got it for "free") minus sale price, so the potential tax liability would be higher.

Just to contradict myself (!) if it is the donee's (son's) home, then no Capital Gains Tax would be payable, if it was his principle private home.

As everyone else has pretty much said, his best bet is to get full legal and financial advice, to be sure as we only have limited information available to us here.

Let us know if your property lawyer friend has any ideas if you can.


Have you considered going onto your Fathers Mortgage? Even if you were the person effectively paying it each month you will gain from the following:-

1. No Stamp Duty on any sale of house to pay
2. Your name will go onto the deeds of the property along with your fathers
3. Minimal Solicitors fees
4. Inheritance tax liability is reduced (as if you bought your Dads house, he wouldn't be making the most of his allowance (on death), whereas your 'risk' is increased as you'll be using up your allowance (on death))
5. Your father wouldn't have to worry about any CGT on any gifts

What you propose is legal and can be done (ref HRH The Queen Mother, god bless her), but you could be paying out for no reason to get the same end result?

My 2 cents and all the legal get out clauses etc.

i done exactly what you are enquiring, i bought my father-in-laws house for 10% of the market value (what he owed on his mortgage) this is classed as a deed of gift - speak to a lawyer about it. Also a point to remeber you connot rent it out back to him for 5 years.

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