My parents sold the family home a few years ago and are currently renting. However they want more security of tenure and somewhere they can make into a home. They are 65.
They have some savings from selling their home, but not enough to both live off and buy another house. The plan is that I will buy a house for them to live in. They will contribute £100k towards the house initially, which I will repay them at £10k per year after 7 years. I will contribute around £120k, either from savings, taking out a new mortgage or remortgaging my own home.
What are the tax implications of doing this and is this the most tax efficient way of dealing with the situation?
A further complication has arisen in that a property we were looking at buying is for over 55's - so the owner will not let the property be in my name. I am 43.
Any suggestions as to how I make sure I get back the £220,000 I will have contributed, plus get some share of the gain? I am worried that if my parents eventually need to go into nursing homes, that the property will be sold to pay for this and I will not get my investment back. I am also concerned that if there was to be a family fall out (which seems unlikely now, but you never know!), that my parents could leave the house to my sister in their will and she gets it all or 50% of it, even though I have paid for it. Also that I may need to sell the house in the future for financial reasons and would have no right to force this.
I am in a real dilemma and any advice greatly appreciated!
Thanks