The pitfalls of owning 2 properties?

A question about : The pitfalls of owning 2 properties?

My nan is currently in the process of buying a bungalow as she can no longer get up the stairs in her house. She is in the fortunate position to be able to pay cash. Her best friend of 60 years is lending her some of her savings to enable her to do this.

My nan doesn't want to sell her current residence immediately as she has lived in it since she was 2 (78 years!!) and is worrying about not settling in the bungalow.

As a result, she wants to buy the bungalow and hold on to the house for 6 - 12 months so she can decide where she wants to be.

Could anyone pls explain any financial implications there could be by her doing it this way? Any advice or things to consider would be gratefully rec'd.

I heard something about if she holds on to them for a certain amount of time she will be liable for Capital Gains Tax when she sells one of the properties, anyone know anything about this?

Thanks in advance

Best answers:

• yes she would be liable have a look Here for more info on the subject ;D
• Thanks divadee that is helpful in terms of the Capital Gains. Much appreciated, ta.
  Does anyone know of any other pitfalls? financial implications that may arise? or things that should be considered in this situation?
• Any falls in housing prices will have double impact on her. Any increases will benefit her doubly.
• There are a few potential complications arising from the loan in addition to those mentioned above.
  Firstly your grandmother will not have easy access to any money to repay her friend. When/how is her friend going to be repayed?
  Not wishing to tempt fate but what happens if your grandmother dies in the next 12 months? Has she written out a will so that the friend gets her money back? Would her friend be subject to inheritance tax on the money?
  What if the friend dies within the next 12 months? Will their family want the money straight away? What if property prices have fallen in the meantime and selling the one house is not enough to meet the debt? Would you grandmother have to pay inheritance tax on the gift/loan?
• Also, would there be an impact on any benefits she receives (means tested pensions for example)? You should check this out with the CAB.
  In the event that the friend has to go into a nursing home funded by the state, the DWP could demand that the money is repaid to her immediately, requiring the house to be sold immediately. What if the house price has fallen? What if it is difficult to sell? Your Nan would presumably have to pay the nursing home fees for your friend?
  This could get really complicated. I suggest you thrash out the details of the loan in advance of doing anything.
• Thanks for the thoughts - some things have come up that hadn't been considered.
  Haven't got time to respond at the mo but will respond to your posts in more detail tomorrow.
  Thanks for your posts will repsond tom