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MOTHER BUYING NEW HOUSE IN MY NAME - Help!

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  • Izzy_Skint
    Izzy_Skint Posts: 12 Forumite
    Hello!

    Firstly thanks to ALL who have replied to my original question, it has really opened my eyes.

    Here are the answers to some of the questions :

    1. NO, the house being sold does not have a mortgage. The title deeds are in both out names (mother & myself).

    2. YES, i did once live at the property to be sold for at least 28 years until i married 2 years ago.

    3. Mum is 80 years old and no longer wants the responsibility of filling in forms in the future, she just wants to live at the new property and enjoy life, it was no way a means to beat care costs.

    HERE'S SOME FIGURES

    Property being sold (owned 50/50 with my mum) is worth £450,000.

    The property she wants to buy is valued at £350,000.

    As mentioned the proprty to be sold is in both our names, so would it be a benefit to buy the new house in both our names again?
    I would surly then not be considered a landlord as my mother would still own 50% of the new property.

    I will of course obtain in depth solicitor help before proceeding but this is really helping me get a head start.

    Many Thanks
    Izzy_Skint
  • 00ec25
    00ec25 Posts: 9,123
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    edited 19 June 2017 at 1:57PM
    your latest post only partly helps with working out your numbers....

    1. If mother's new house is purchased with your name on the deeds either as joint tenant or tenant in common the entire purchase price will be subject to the higher rate SDLT. At 350k purchase price that will be £18,000 SDLT.

    2. out of the 25 years you have been a co-owner of the current property and lived in it, was it your only/main residence for that whole time, for example, did you ever co-own another property such as the girlfriend's place before marriage?
    Once you got married the main residence automacticlaly becomes whereever you live together, if if only one of you owns that place. So, as you married 2 years ago, it was your only (owned) home for 23 years out of the last 25 and you will get a huge amount of Private Residence Relief (PRR) against your CGT. To give a more accurate figure we would need confirmation of:
    - no other ownership by you pre marriage
    - month and year you moved out, which of course may be earlier than the date you got married. If later, the date of marriage takes precedence.
    - value of the property 25 years ago when you first became co-owner

    the reality is that you get 100% relief for the PRR period. PRR is a) the time you lived there as your main home plus b) the final 18 months of ownership if not living there at that final period. The calculation must be in months, not years, but you can immediately see that with 25 years ownership and "approx" 24.5 eligible for PRR, there is apparently only 6 months when it is liable.
    In somewhat simplified terms the CGT calculation is:
    gross gain = (Selling price - original value) - associated buying and selling costs such as legal and EA fees
    taxable gain = gain x (liable period/ total ownership period) - CGT allowance £11,300
    tax payable = taxable gain x 18% and or 28% depending on the size of the gain

    in theory your liability will be small or could be zero, depends on the missing data...

    3. at 80 years old your mother would be highly likely to be regarded as having deliberately deprived herself of capital if she does end up needing state funded care if she gives you sole ownership of the new house. Being unwilling to sign some forms once when it is purchased is no excuse - it is not as though she has to sign forms "in the future"

    4 the better option for the new home would be: not to be a co-owner, take a charge, and accept that it may need to be sold for care home purposes at which point you will claim your money back. Whether your "loan" includes an interest clause is down to you. if it does that would of course be taxable on you.
  • xylophone
    xylophone Posts: 44,139
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    Mum is 80 years old and no longer wants the responsibility of filling in forms in the future, she just wants to live at the new property and enjoy life,


    There seems to be no reason why you should not lend your share of the sale proceeds to your mother against a first charge on the property, so that she can purchase in her sole name.

    I cannot see why she would think that owning a property in her sole name would involve her in extra form filling?

    She'll be paying CT/utilities/insurance in just the same way as she is now?
  • Mojisola
    Mojisola Posts: 35,551
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    xylophone wrote: »
    I cannot see why she would think that owning a property in her sole name would involve her in extra form filling?

    I'd echo this - we own our house but I can't think of any form filling that we've had to do because of that.
  • AdrianC
    AdrianC Posts: 42,189
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    Izzy_Skint wrote: »
    3. Mum is 80 years old and no longer wants the responsibility of filling in forms in the future, she just wants to live at the new property and enjoy life, it was no way a means to beat care costs.
    If that's her motivation, then the best route would be to get power of attorney, and use that so you can do the paperwork on her behalf.

    Do you own another property, your own home? If so, then you being an owner (part or joint) of her new place will cost 3% Stamp Duty.
  • Keep_pedalling
    Keep_pedalling Posts: 16,437
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    AdrianC wrote: »
    If that's her motivation, then the best route would be to get power of attorney, and use that so you can do the paperwork on her behalf.

    Do you own another property, your own home? If so, then you being an owner (part or joint) of her new place will cost 3% Stamp Duty.

    POA would be a very good idea whether this move of house happens or not.
  • Izzy_Skint
    Izzy_Skint Posts: 12 Forumite
    edited 19 June 2017 at 3:56PM
    Hello

    Again THANKS for everyone's detailed replies, especially 00ec25.

    A)
    On the SDLT of £18,000, this could surly be argued if i was to buy the property jointly with my mother as yes it would be my second home of non-main residence BUT my Mothers main home of residence. She would own 50% of the new property and will be living there, why should she pay higher rate if it is her own main residence?

    B)
    Sorry, need to get my marriage date right! Blame the heat!
    We (me & mum) purchased the property to be sold in Nov 1992 for the sum of £175,000. It was both our main residence and we owned no other property. So on those dates i lived full time in the property for 21 years as i moved out after marriage in October 2013.

    C)
    I fully understand the care home situation so this of course could arise in the future no matter which name it is in. If purchased 50/50 then i can argue only her 50% share would be liable for the care costs surly?

    D)
    Regarding filling in forms after 80 years old!
    Mum is Mum, she worries.

    Please let me know if you need more details and again thanks for everyone's input.
    Izzy_Skint
  • AnotherJoe
    AnotherJoe Posts: 19,622
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    Another vote for POA.
  • AdrianC
    AdrianC Posts: 42,189
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    Izzy_Skint wrote: »
    On the SDLT of £18,000, this could surly be argued if i was to buy the property jointly with my mother as yes it would be my second home of non-main residence BUT my Mothers main home of residence. She would own 50% of the new property and will be living there, why should she pay higher rate if it is her own main residence?

    The 3% has nothing to do with her.

    It would apply because you are buying a property that is not your only property, and is not a main-residence-swap for you. It applies to the whole purchase price.
    I fully understand the care home situation so this of course could arise in the future no matter which name it is in. If purchased 50/50 then i can argue only her 50% share would be liable for the care costs surly?

    Given that you owned 50% of her previous place, and have done so for many years - very probably, yes.
  • Keep_pedalling
    Keep_pedalling Posts: 16,437
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    The extra 3% only applies to buying an additional property, it does not apply to the new joint home as the existing home will be sold at the same time, so no change in the number of homes owned

    If home ownership remains 50/50 then yes only her share can be used for care costs..
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