Q: My grandparents bought a holiday cottage on the coast, where as children we spent every summer. When my grandmother died last year my parents inherited the property, but due to inheritance tax they say they need to sell it. We would very much like the cottage to stay in the family and wonder if there is any way my brother and I could buy part of it to release cash for my parents so that they don’t need to sell?
A: You should get a current valuation on the property and agree with your parents what share you and your brother are to purchase. You must then decide how you hold the property, as joint tenants or as tenants in common. This is a fundamental issue on which your solicitor can give you advice. The alternative to this would be that you and your brother have a private mortgage secured against the property which is repayable on identified trigger events. Your solicitor can advise you fully on the best way forward for you and the family.
Whether you decide to buy into the property or secure a private mortgage on it, a solicitor will draw up transfer/mortgage documentation as appropriate. Your solicitor will then register the transaction with the Land Registry.
You should be aware that if this is a second property and you own part of it, when you come to sell the property there may be a capital gains tax liability on sale. Additionally if you decide to purchase the property and it is a second property for you and your brother, after 1st April 2016 stamp duty land tax rules change and you will be liable for Stamp Duty on your purchase. There would be no stamp duty land tax on a private mortgage. It would therefore be advisable to seek in-depth legal advice before making any decision.