Property advice needed

[creativeyes]

Hi

I have lived in a house with my husband and 2 children for 17 years.
My mother owns the house. We have spent approx $100,000 on improvements to the property. We have not paid rent, but pay the rates each year. She has not negatively geared the property properley over the years. She now tells me she wants to SELL so she has some money
as she is cash poor and because of this asset cannot get the pension - even after selling she has to wait 5 years. she is over 70.
Despite seeking advice on options instead of selling she won't listen.

My thought is to buy the property from her.

My question is, does it have to be at the market value?
I have done a few sums and worked out that she would be financially
better off doing it this way, rather than selling, paying capital gains, stamp duty, fees etc and THEN (so she says ) purchase a property for me again. I want to be free of the apron strings, but she just wants money in the bank.

The property purchase price was round 150K. value now round 800K, though in order to sell there are approx 30K of work that needs to be done to it - otherwise she may as well give it away. by the way - up until a week ago when she said she had to sell - all these years she told me she is willing it to me...go figure.

what do I do?:rolleyes:

[adrian]

You're lucky to have been living rent free all these years. $100,000 worth of improvements is less than 17 years worth of rent so you've had it easy. You should have been saving the rest for a place of your own.
She has every right to sell it and enjoy her retirement.

[Chesand]

Contact Centrelink and and make an appoitment with a FIS officer ( Financial Information Service). They will not tell you what to do but rather what will happen if your mother takes certain actions.
I have found them most helpful with my mother's affairs

[fred.n]

get a loan of say $100-150,00 and GIVE it to your mum
She's done the right thing buy you, now you can look after her

TO EASY

[Dan]

We have spent approx $100,000 on improvements to the property. We have not paid rent, but pay the rates each year. She has not negatively geared the property properley over the years.

With no maintenance or rates to pay and a low purchase price as well, it would be very hard to negatively gear in the first place.

[maglite]

Hi

My thought is to buy the property from her.

My question is, does it have to be at the market value?
I have done a few sums and worked out that she would be financially
better off doing it this way, rather than selling, paying capital gains, stamp duty, fees etc and THEN (so she says ) purchase a property for me again. I want to be free of the apron strings, but she just wants money in the bank.


what do I do?:rolleyes:

AFAIK she would have to pay all of those fees wether she sold the house to you or another person.
I believe Centrelink are very awake to people undervaluing assets and passing them onto family members for less than the market value.

[masoth]

Why would she have to pay capital gains tax??
You say she 'owns' - is there a mortgage?
I assume mother did NOT live with you - was she renting, or own another property, etc.?
State's laws differ, of course, but if you wish to be particularly investigative you should check Adverse Possession (AP) as it applies where the house is. In Victoria AP is related to property rates.

soth

[creativeyes]

Luck has played no part - when my father passed away many years ago - there was to be minimal rent paid. My father first bought my brother a house, which he subsequently lost due to 'bad business deals'. He has
lived and sponged from my mother ever since.

Capital gains would be payable by mother as she owns the residence she
currently lives in and owns this one - an investment property.

Since we have been here she has told me constantly that she would never sell the property, and again, that it would be willed to me.
Now that the property is worth a lot of money she decides to sell in order to obtain some income. we have looked at her going a guarantor for us
to buy and build etc and subsequently exiting the guarantorship when the property we bought and built. she wants no party to anything other than selling.

I was thinking an offer of $400K would surely satisfy her for an 'income'.
She just likes to have money in the bank so she can spend, and of course, my brother who does not work, continually sponge off her.

so please, do not tell me I am lucky!

[maglite]

There a some good reverse mortgages being offered these days by the banks at pretty good terms too.
Fair enuff, they arent everyones cup of tea and spending limits would have to be imposed to ensure it lasted as long as possible.

If i was in the same position as you, i would be trying to make sure that my mum wasnt being influenced by other interested parties.;)

[doug the slug]

I hate to sound harsh or unhelpful, but why would anyone join a WOODWORK forum to ask for personal advice like this on their First post? We are a friendly bunch with a widespread knowledge base, but last time I looked we arent the internet agony aunt. You need to seek some professional advice from someone who understands the implications of what your mother is doing and is eloquent enough to convince her to see reason. Im not buying into this one :D :D :D :D

[maglite]

I hate to sound harsh or unhelpful, but why would anyone join a WOODWORK forum to ask for personal advice like this on their First post? We are a friendly bunch with a widespread knowledge base, but last time I looked we arent the internet agony aunt. You need to seek some professional advice from someone who understands the implications of what your mother is doing and is eloquent enough to convince her to see reason. Im not buying into this one :D :D :D :D

you just did:p

[seriph1]

It is my opinion "someone" else is in her ear - maybe your brother. I couldn't begin to imagine what a burden it must be to have a situation like yours. My parents are not well off at all, my brother and i do what we can to assist - he does more as he lives near them (compared to me living 2000+ k's away) I imagine they will leave the home to him as he has always been there for them.

But to your situation: 1. It isn't your asset 2. No one here can advise you 3. It is odd at the least to ask here I feel. 4. I am uncertain why you spent the money on improvements but imagine it was because you thought you'd own it in the end 5. Your un-requested expenditure on the property improvements are irrelevant and may not even be seen as improvements, especially if they were not done legally and to full compliance 6. Both your brother and you got a pretty generous deal. 7. It is dinner time so I am off

[johnc]

I gather Mum did not live with you from the way you have framed the first question, therefore if the property was bought after 1985 there is capital gains tax. Negative gearing is absurd, you can't take out a loan on a poperty and claim that amount without either having used it for the original purchase or capital improvements, and those capital improvements need to be to the value of the loan claimed. Your Mother fails the pension assets test now and will do so when she sells the place. Besides no rent no claim.

In the end your Mum is dead unlucky that she has had a daughter sponging off her for the last 17 years rent free. Quite frankly it's about time you stood on your own two feet and supported yourself. Not only that but this is not an agony aunt forum so don't expect to much sympathy. Why don't you just do the right thing and pay a decent rent so your Mum can have some comfort in her retirement.

John.

[Sturdee]

Why would anyone join a WOODWORK forum to ask for personal advice like this on their First post? I'm not buying into this one :D :D :D :D


I am wondering too :confused: and I'm not buying into it either. :D :D :D


Peter.

[kiwigeo]

I was thinking an offer of $400K would surely satisfy her for an 'income'.
She just likes to have money in the bank so she can spend, and of course, my brother who does not work, continually sponge off her.



Buy the house and then start charging your brother rent......

[Christopha]

It's your Mothers property, you have been sponging off her for 17 years, either pay the full market value to the lady or pisss off and buy your own somewhere else with all of the money you must have saved and let her enjoy HER investment!

[dazzler]

Hey .....lets all sing together....:rolleyes:




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[boban]

Where is the problem.

Your mum needs an income and you are living in her house rent free.

Is it me or is this not so obvious. Pay her rent or offer to have her finance your purchase from her. That is you make the repayments to her instead of the bank.

[havenoideaatall]

Where is the problem.

Your mum needs an income and you are living in her house rent free.

Is it me or is this not so obvious. Pay her rent or offer to have her finance your purchase from her. That is you make the repayments to her instead of the bank.

I'm in agreement - she is entitled to an income of sorts from it - she may have willed it to you but circumstances change.

The best way is to raise a mortgage on it for her income. Or, if you legally and contractually paid her over a period of time, the time she is alive, not only would she get an income, you'd pay no interest, and you might not do this over 30 years, and still end up owning probably.

[bitingmidge]

- she may have willed it to you but circumstances change.

Yeah, like she didn't die!

I'm 100% with Christopha here.

Pay her what it's worth, rent it for what it's worth, or go and buy a place of your own.

Waiting for your parent to die is not sound financial planning.

I hope one day your kids get to repay your favour!

P
:(

[Gra]

Have a lawer write up a contract, where you buy the house from your mum, your mum loans you the "cash". You make your repayments to her instead of the bank. For tax reasons the loan will need to be a "Market Rates".

This will give you your house and your mum an income stream. This will also lessen your brothers claim on the house when she does die.

The tax implications to your mum will need to be explained by an investment advisor

That is my personal opinion, I have no legal basis for this advise and if you act upon it I except no legal responsibility (and the rest of the legal disclaimers)

Sounds like a win, win to me

[seriph1]

the issue will arise at estate distribution time - and by the looks of this debacle it WILL arise