Dont want to loose a property i own to pay for care home.

Oldernotwiser

Baz wrote: »

Yes but once she took up that right, the deed of trust overrides it. i.e she owned it for the period it took to buy it to sign up the deeds. There's no gain as the property would not have increased in value between those two close dates. No IHT as its below the limit etc. Furthermore was that requirement in place 9 years ago?

How do you square this with the usual requirement in this situation that the tenant has to own the property for a certain number of years? Genuine question.

localhero

Baz wrote:

The risk is that care is needed within the first few years as some councils would take the house into account if it was transfer out within a certain time frame. However 9 years would mean it has certianly dropped out of the equation.

The OP has to get hold of the care terms, like I told him to, to see how far they go back. 3 years I would imagine.

There is no limit in time that a local authority can go back to explore the transaction, but I would be inclined to agree that the length of time since it occurred would make it very difficult for the local authority to establish that there had been a deliberate deprivation of assets.

In any case, irrespective of the length of time involved, looking at the facts, it seems clear to me that regardless of what the legal title said when the property was purchased from the council, it was OP's money that was used to pay for it and therefore the asset (or beneficial interest) has always belonged to them - and so in my view should be excluded from the means assessment.

With regard to CGT, which is not one of my specialisms, I suspect the only way the OP can avoid this is not to dispose of the property in his lifetime.

Oldernotwiser

localhero wrote: »

There is no limit in time that a local authority can go back to explore the transaction, but I would be inclined to agree that the length of time since it occurred would make it very difficult for the local authority to establish that there had been a deliberate deprivation of assets.

Possibly of some relevance,
"It is against the law to transfer ownership of an asset to another person specifically to avoid paying your care home fees. There is no time limit as to how far back the council can go to find out if you have given away assets to avoid paying care costs. If this is fouund, the council can treat you as if you still had the asset and you will have to pay for your care accordingly."

From www.direct.gov.co.uk

localhero

For argument's sake, if the nan had used her own money to buy the house and then gifted the property, then unless there was some other good reason for doing so, there would be the possibility that the transaction would be disregarded for means testing.

In the OP's particular circumstances, I think it would be extremely difficult for the local authority to succeed on that point.

sloughflint

It's all starting to make sense to me,I think.

Nan would have been perfectly entitled to take out a mortgage on the property offered at a discount. She could possibly have found herself a 100% mortgage.In that case she would have been the owner on paper but would [STRIKE]probably have had very little equity in the property for means testing purposes over the last nine years[/STRIKE].( edit: I take that back. Flat value has shot up)

Companies offer mortgages for a profit. Here a grandson has in a way simply given his Nan an interest free mortgage to release a bit of spare cash ( no rent to LA) to be enjoyed for the rest of her life. In return he and Nan hope that he will make some kind of return on his initial outlay and to do this have named the grandson as owner but safeguarded Nan during her lifetime. The way I'm interpreting it all now,[strike]deprivation of assets doesn't appear to come into the equation at all however long ago the setup was arranged[/strike].(edit: in view of the increase in the flat value, she probably has deprived herself compared to a 100% mortgage but that could not have been predicted so surely not intentional DoA)

Why couldn't all this have been explained to the OP rather than having to come to an internet forum to seek the answers? Going by the thread's title and OP, this was the primary concern and taxation a secondary aspect.

jimmo wrote: »

The fact that the solicitor involved washes his hands of any tax consequences is also rather worrying and seriously suggests that whatever the planning was behind the purchase and continued occupation of the flat by nan tax issues were not considered.

I agree. Both Nan and grandson should have been made aware of all the consequences for both of them before signing on the dotted line.

Treading_Water

Oldernotwiser wrote: »

Possibly of some relevance,
"It is against the law to transfer ownership of an asset to another person specifically to avoid paying your care home fees. There is no time limit as to how far back the council can go to find out if you have given away assets to avoid paying care costs. If this is fouund, the council can treat you as if you still had the asset and you will have to pay for your care accordingly."

From www.direct.gov.co.uk

Surely though, in this case, it wasn't done to avoid care home fees but, to provide Nan with a safe continuing home for as long as she needed it, (With the added bonus of being a long term investment.)

Baz_2

jimmo wrote: »

Why are you posting this?

Are you a qualified solicitor or accountant or something similar?

What makes your opinion better than Cook County’s?
I am neither an accountant nor a solicitor but like to think I may be “something similar” as a former Inspector of Taxes who specialised in Capital Gains Tax for some years.
If I were dealing with this case in my former job I would certainly seek advice from HMRC solicitors and would insist on seeing all the paperwork for the original purchase of the flat and the deed.
From the information posted on here I find it impossible to judge whether the OP actually bought the flat (became the beneficial owner) and then allowed his nan to live there rent free or whether she actually bought the flat and then “gifted” it to the OP subject to her continuing right of occupation.
There are certainly hugely different consequences for Capital Gains Tax purposes.
The fact that the solicitor involved washes his hands of any tax consequences is also rather worrying and seriously suggests that whatever the planning was behind the purchase and continued occupation of the flat by nan tax issues were not considered.
If any damage was done then, no-one can change history and what is done is done.
I think the only totally valid advice the OP has received so far is that he should seek advice from another solicitor, preferably one who specialises or at least claims expertise in tax matters.
Quite frankly, anything else is down to interpretation of the few facts we have been given and any of the posters including Cook County could be correct.

And why, as a tax inspector would you be looking at this transaction? Exactly what is it you would be trying to get out of it? Income tax? Capital gains or IHT?

And as it goes I am a chartered accountant.

McKneff

Treading_Water wrote: »

Surely though, in this case, it wasn't done to avoid care home fees but, to provide Nan with a safe continuing home for as long as she needed it, (With the added bonus of being a long term investment.)

In my opinion, in this case it was done to make a fast buck at the taxpayers and homeless expense.

On another point i wonder what nan's 3 daughters have to say about all this.

ninky_2

bendix wrote: »

Nobody would begrudge your nan owning the flat,

i don't know if begrudge is the right word but i did, and continue to, oppose the 'right to buy' policy over council housing.

Torby

anniehanlon wrote: »

In my opinion, in this case it was done to make a fast buck at the taxpayers and homeless expense.

On another point i wonder what nan's 3 daughters have to say about all this.

I wouldn't consider 9 years to be a "fast buck", only circumstances changed, it could have been 15 years.

Which taxpayer's expense?
Which homless person's expense?

The government made the decision with local authorites that you have a "right to buy" your property and agreed a scale of reduction based on how long you lived there.

Local authorities (when it comes to housing) are the ones who are ripping off the taxpayer. Just take a look at council housing lived in by the benefit culture families, some authorities are charging £80 a week for the run down, poorly insulated ramshackle housing that these people are forced to live in...

They don't pay rent but the housing authorities "claim" rent and rates etc for them...so who's ripping off who?

Why should nan have to pay for her care...benefit culture dont?
Many people had the opportunity to buy local authority housing, others took the plunge to buy into private housing, we all make choices, we all make sacrifices.

I have just finished off my mortgage, I was paying £105 p/month, I now own my house, I made sacrifices along the way, times were hard, but consider this local authority rents can be as high in a week as I was paying in a month.

I have 3 daughters and one son, if I have to go into care, I want equality, I want the same care as those around me who willingly NEVER worked a day in their life...my property and estate will go to my wife and children if I die....I've already been taxed all my life....enough is enough.

If you want to look at who's ripping off who....just look at the housing expenses of government ministers...

finally, what nans 3 daughters have to say isn't really relevant, they didn't appear to help financially or practically....and as I've said before, I don't want my children ruining their lives at the expense of mine.