Can I give my parents £150K to clear their mortgage?

medders2604

If you want to find out more about local authorities forcing people to sell their homes and what they can and can't take into account when calculating how much people have to contribute towards care fees take a look at the CRAG report its available to download via the department of health website.

Savvy_Sue

It might help to have a rough idea of ages, and why they're struggling with the repayments? What you don't want to do is pay off their mortgage, but then find that they're still struggling because mum spends all her days down the bookies, for example. Not suggesting for a moment that this is the case, but you get my drift.

KellyWelly

Have you considered the possibility of one of your parents passing away and the living one re-marrying? Something similar happened in my mother's family where her grandmother re-married and did not sort out her will properly and the house was left not to her daughter but to her new husband. Once grandmother was gone he promptly did the dirty and refused to hand anything over.

I would be really cautious to hand over that sort of money and have no legal ownership of the house - I'm sure your parents wouldn't take the money with any intention to do you out of it but things happen that we'd never expect and you could lose it all.

localhero

KellyWelly has raised a valid point and others have suggested what would happen if either of your parents required care. If you make an outright gift then there is no guarantee you would get it back if either of those things happened.

I think I would worry less about the IHT aspect and loan your parents the money instead. That way, whatever happens your investment is safe. In any case, as soon as you inherit from the parents the IHT liability would resurface anyway.

patchwork_cat

Would this be better put on tax cuting boards as a very unusual situation - usually the other way around!!

margaretclare

medders2604 wrote: »

If you want to find out more about local authorities forcing people to sell their homes and what they can and can't take into account when calculating how much people have to contribute towards care fees take a look at the CRAG report its available to download via the department of health website.

Could you post a link to that report?

It would be good to have some clear factual information on this because there is a lot of emotional stuff around as in 'the government will have it (your house) off you'.

I am not sure how anyone can be 'forced' to sell in the present climate - round here no one can sell because there are no buyers!

I would agree - get everything properly drawn up, signed and sealed, family or not. I have appalling memories of things that happened within my own family regarding property transfer, 'gentleman's agreements' that were never kept to.

And yes, widowhood and remarriage can happen - I can personally attest to that too!

ailuro2

Buy the house off of them, and then let them live in it for a nominal rent?

Do a bit of homework, then seek professional advice.

p.s. Well done for wanting to be so nice to your family.:D

molan

Thanks for all the great pointers everyone!

My parents place is worth about £300K so I couldn't afford to buy the whole thing. If I can give them the money Ok then we would definitely be able to set up some sort of joint ownership as a trust or whatever is most efficient.

I'm very aware of potential problems with them splitting up etc. The house is actually my Mum's and the deeds are in her sole name. However her partner has been living with her for 10 years or so and could make a claim on it.

We've had a fairly open discussion and agreed that the house would be willed to me in the event of my mother's death but that I would allow her partner to live there rent free if he survived her.

Part of the reason the house has always been referred to as 'mine' when my mum goes is that I paid half their mortgage when my mum & dad first bought it as they couldn't afford it on their own & I was earning enough to give them the money. This was always intended as a gift & I don;t even know how much I gave them, lol.

Obviously this could all get very messy & I'll need to get a decent lawyer to draw everything up & seek pro financial advice as well!

medders2604

ailuro2 unfortunately the tax man doesn't let you do that unless you pay full market rent they will still deem you to have a benefot and therefore include it in your estate for tax purposes otherwise everyone wuld buy their grandparents house and rent it back at a £1 a week or something and the taxman really doesn't like that.
margaretclare here you go lets see if this works: http://www.dh.gov.uk/en/Publicationsandstatistics/Publications/PublicationsPolicyAndGuidance/DH_4107292

Sorry you may have to cut and paste not sure how the links thing works Im quite new on here.
Hope that helps. I think I have a simplified version of CRAG report somewhere on my works laptop if I find it I'll let you know and can email it over to you or something.

Savvy_Sue

patchwork_cat wrote: »

Would this be better put on tax cuting boards as a very unusual situation - usually the other way around!!

It could be, but I've been partly waiting for a rough guide to ages involved to see whether Silver Savers would be appropriate, and also a clue as to why the mortgage is now unaffordable. Sounds like it never was!