Buying in-laws home

Hi Honky

How much are you going to purchase it for? Market Value?

1) You could use you house as collatrol and borrow 100%

2) You could borrow some money agains your house (via a redraw or LOC maybe) and use this as deposit on another loan for the new house.

3) You could get the parents to lend you the deposit, and get a loan loan for the remainder.

4) Often these sort of transactions are done at less than market value and it can be structured so that lenders will basically lend you 100% of your purchase price. Gifting can have social security consqences as well so this may be better than 3.

I think 2 or 4 is preferable. All of these scenarios could be done on either a normal loan, or a low doc loan.

However before you do this, have you considered all family planning and taxation issues? It may be wise to leave it in the parents names. There could be considerable tax advantages to do that. If you become owners and it is your second property there is land tax, captal gains tax, stamp duty on the transfer etc.

If the parents held it until they died it could be passed on CGT and stamp duty free (I think). And your cost base would then be the value of the property at the time. And I think you would have 2 years in which you could sell the property CGT free.

Lots of things to consider so I think it would be worthwhile to speak to a GOOD lawyer (hard to find!).

Terryw
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