Any positive stories for buying with sibling?

Bluecup

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Has anyone here got anything good to day about buying a property with a sibling? I read a few of the past threads on this matter and most posters said to stay clear. It's an idea that's been in my head for a few weeks now and I need to either put it to bed or start taking it more seriously.

My wife and I already have our own place but were looking at going 50/50 on another property with her brother. Us (my wife and I) and my brother-in-law would make equal repayments on the mortgage. Her brother would live in it and we'd get the rent from a lodger in the second room. I've known him a long time and he's a man of integrity as far as money is concerned.

I'm not sure if this would work but can he collected the rent from the lodger under the rent-a-room scheme and keep it for himself? Meanwhile he pays us €3,000 gift (under tax free threshold) and fills our car with diesel a few times during the year. The property would be out in the country so wouldn't be a huge rent (or mortgage) so the €3000 would cover most of it. If that's not allowed, going down the regular rental income route would work too.

Assuming my brother in law will keep to his side of the contract, are there major pitfalls to this type of investment? For one, he'll have to come up with 20% for a second property down the line, losing the first time buyer advantage.

When it is time to sell, and any gains are split 50/50 between us, will he be CGT free on his portion?

Interested to hear your thoughts as if its a non-runner I can move on to my next project with a clear conscience!
 
It's a non-runner. As you would own part of the house as an investment, you would not qualify for the Rent a Room Scheme.

If he gets into difficulty paying the mortgage, then your credit record will be ruined as well.

If you want to trade up at some time in the future, your mortgage on the investment property would be a limitation.

You might need to liquidate your investment and it might not suit him.

I am a great fan of joint purchases when neither can buy on their own, but a complicated scheme like this is just not a good idea.

If you want to help him to buy a house then give him a loan if you have the money.

Brendan
 
Thanks Brendan and Elcato, there is a lot of sense in your responses and they are along the lines of what I expected.

It isn't that I want to buy him a house as such but rather it would allow us to have a property investment without committing the full purchase price of a house and has the bonus of a family member living there instead of a stranger. The downside is the risk factor of the other party involved and the complications of an untimely sale.

I'd have to run the numbers again but there would have to be a price one could put on those downsides wereby it'd be still worth making the investment.
 
Hi Bluecup

Your reply makes the decision clearer than ever.

The only motivation for doing this would be to help a relative get on the housing ladder. You could make a decision that the benefits of this outweighed the risks of it going very badly wrong.

But if he does not need your help, then don't do it.

There are plenty of other investments out there. If you have a mortgage yourselves, pay it off. If you have no mortgage, then invest in equities.

Brendan
 
Even the thought process on this one says this idea should never leave the back of an envelope.
 
Jeez, ye are a tough crowd but I do appreciate the candid replies. I was hoping for someone to step in and say it worked for them but that isn't the case so that carries weight in its own way. Thanks for the responses.
 
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