Hi Everyone,
I would like to get some ideas please on how to help my mother-in-law. She works in aged care and is on her feet most of the day, and she has problems with her feet and its hurting her.
She has a house in gosnells (wa), which is worth between 250k-300k, and has 60k left on the mortgage. The house is in her name only, altough she is re-married (about 3 years ago). She bought the house about 4 years ago. We would like to find out the best arrangement to pay out her mortgage so that she can ease off working and take a load off her feet!
She has 3 adult children, and between those 3 families, we want to pay her house off for her, perhaps in exchange for some equity in the house. We want to do this in a ‘legal’ way, but also in a cost effective way. For example, what are the stamp duty implications for adding 3 parties to a title deed for a part portion? 60k between 3 parties = 20k each. 20k/300k = 6.67% equity share each.
If anyone has faced a similar situation or has any ideas, we would love to hear them Just trying to help someone out here.
The ‘children’ all have sufficient equity and earning capacity to get this done, its more a question of ‘how to best do it’. Tania and I will look forward to your thoughts.
Regards, Andrew.
[smiling]Adding names to the title attracts stamp duty like purchasing. Another way to do it is just to set up some sort of agreement. Maybe put a caveat on the title to protect you interests.
Terryw
Discover Home Loans
Parramatta
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As Terry said, changing names on the deed would attract stamp duty and probably legal fees.
Could the $60,000 loan be renegotiated so that payments are lower? If the house is rented, maybe have the payments equal the rent. If your mother-in-law lives there, then payments they can comfortably afford?
Margaret
Thanks Terry & Margaret,
Would the full stamp duty apply, or just the pro-rata portion? Say 60k/300k = 20%, therefore only 20% of the regular full sale transaction stamp duty applies by placing 3 additional names on the title (mum = 80%, child1 = 6.67%, child2 = 6.67%, child3 = 6.67%) ? Wishful thinking?
Secondly, the agreement idea sounds good, more specifically, what kind of an agreement, and who could draw it up for us at a reasonable cost? How does a caveat get placed on the title?
Thirdly, refinancing in this case (i think) may not help that much as the original loan was in the order of 80k, so the difference in repayments would not be as substantial as we are looking for (getting rid of them alltogether for her).
Thanks for taking the time, we appreciate it!
Regards, Andrew & Tania.
[exhappy]Yes, if you are all only ‘buying’ $60,000 worth of property and the value is $300,000, then the stamp duty would only be on $60,000, not the whole lot. But since it is family, is even this necessary? There will be other implications such as CGT if any of you sell and this is not your main residence.
Other implications would be the loan would need to be changed. All people on the title will have to go on the loan – this will affect your servicability.
A solicitor should be able to draw up some sort of agreement. there is a standard agreement for the joint purchase of property available at http://www.lawcentral.com.au for you to look at and get some ideas.
Things can get messy with family if some sort of problem arises – what if one of your siblings goes bankrupt or divorced etc.
Terryw
Discover Home Loans
Parramatta
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Just send me a blank email, with “subscribe†in subject line.Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
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Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Hi All
I agree with Terryw, re – contract and a caveat.
Caveats are easy to have put in place, they are listed on the title to show you have a financial interest in the property and prevents the property being sold with out the caveats owner’s permission.
You can have them lodged on anybodies property, I know about one being placed on a house by a nasty mother inlaw.
She placed it on via help from legal aid in Melb no body knew about it. (she was in her 60’s and losing the plot) 5 years later she passed away, about 12yrs later her son died and on the way to the funeral (I mean whilst travelling in the funeral car to the cemetry) the wifes mobile rings ” are you Mrs…. ” “no she died years ago. I am sorry on my way …. I call you back”
She calls back and it appears these poor people have a caveat on their house by the mother in law who they do not know and they can’t sell their house. It turned out that the caveat was supposed to be on the sons house, it got put on the wrong one.!
We still think it was the mother inlaw getting one last dig at her sons wife, really creepy timing.
Celeste
Celeste
Draw up a trust with family members being trustees plus beneficiaries
The 3 gift the money to the trust. ($20K each)
The trust makes an interest free(or whatever) loan to your mother.
Your mother pays out her existing mortage.
The trust can have a mortgage over the house – is not expensive overall.
As the 3 children are trustees and beneificiaries, then there is much flexibility. You avoid all the SD and divorce problems.
Of course you should talk to your solicitor/accountant or some other financial advisor
Yes you can have some legal agreement between the three children, but would not allow much flexibility. The trust would give that to you.
Regards
JohnInspired Finance
(02) 9944 7776John’s idea sounds good!
Terryw
Discover Home Loans
Parramatta
[email protected]
Sign up to my mailing list.
Just send me a blank email, with “subscribe†in subject line.Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
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