Purchasing investment property with brother

[Mammysboy]

If an inverstment property is purchased equally between 2 brothers (both of who already have a PPR each):

- what are the stamp duty implications? If the property costs 350k, is the 6% shared equally?
- what would the best mortgage arrangement be? Assuming each has a deposit of 50k and excluding the purhasing costs (for simplicity), would each brother take a separate mortgage of 125k on the property? Can both parties have separte sized mortgages on the property?
- would both parties be named on the deeds?
- would income/expenese be split 50/50?
- on selling would CGT be split 50/50?

Thanks,
Mboy

 

[ClubMan]

How you split things (SD, income/expenses, share of property, CGT etc.) really depends on yourselves. Obviously if one person is putting up more capital or putting in more hands on effort than they other then they may look for a bigger share. You should have a suitable legal agreement governing the joint purchase. Don't assume that fraternal ties will obviate the need for this!

Buying a House with a Friend - Draft Agreement

 

[Dreamerb]

Regarding mortgaging, there's no obvious advantage to having two mortgages - even if lenders will allow it, which they are unlikely to do. You should get a joint mortgage for the ful amount required, and make any necessary agreements between yourselves on how you service the mortgage. The simplest thing is probably to set up a joint account into which rental income and any top-up financing goes, and have the mortgage direct debited from there. Account fees will be tax deductible as a business expense.

And I second ClubMan's recommendation that you put a legal agreement in place - as a bare minimum, something both of you countersign and retain copies of, even if you're not going to have it officially witnessed by your solicitor. Property rows in families are incredibly damaging to the families caught up in them, so you're best setting out all of the expectations and agreements in advance. That way, if things go pear shaped, you know how to deal with it, and you've a much better chance of keeping good relationships.

 

[Mammysboy]

Okay thanks for the advice. We will be going 50/50 on everything so it makes it more straighforward and will go for a joint mortgage. We will of course sign a legal agreement.

Regards,
Mboy