Need to sell elderly mothers 2nd house

JMG_2

Ok, not sure where to start with this. Husband, myself and son (14) live overseas. We rent a villa in the country we live in and rent out our property in the UK (current value £300k, rental £850 pm, o/s mortgage £80k).

My mother (77 years old) is getting very confused. She has paid council tax for when the property was empty and owed by previous tennant who did a runner, has forgotten to pay LL insurance, doesnt know who she has spoken to and couldnt remember she had a tenant when husband spoke to her today (he is back in UK). 23rd Jan 2006 she purchased a rental property for £167k with a 13 year interest only mortgage of £87k. £14k was spent in renovation costs. I'm not sure if this is relevant to my question but I'm trying to be as accurate as possible. Current value £130k

She owns outright the house she lives in (current value £150k). Basically how do I go about the process of transferring ownership to myself and or my son? She is happy for this to take place. I have read about intention to deprive?. I know we are going to be stuffed royally with all of this, but I just want any responsibility for this second house to be removed. She and I feel its causing her too much stress. I already have enduring power of attorney but have no wish to do anything without her full participation.

In essence what is the most efficient way to do this? Can she gift the house? Given that no tax planning has taken place I know we are going to be liable for a lot of tax. Additionally she is planning to leave her current home for sheltered accomodation, within 12 to 18 months (although possibly sooner given her state of mind).

thanks in advance

zarazara

Have you contacted Citizens Advice and Age Concern? i'm sure they will be able to give good advice.

Cook_County

What country do you live in now? There may be income tax, estate tax, gift tax, wealth tax, forced heirship, sharia law issues etc etc ???

JMG_2

We live in Dubai. I have good advice re sharia law etc (we are all UK born and bred with UK passports), so no real implications regarding that.

I am sure there are loads of implications, I just wish I could find someone to talk me through it all. all the people I come across cant help me with everything and then veer off into what am I going to do with the money etc.

I will arrange to contact Age Concern, thats a good idea. Thanks zarazara.

tyllwyd

So your mother owns a property currently valued at £130K but with an outstanding mortgage of about £87K. She no longer wants the property and wants to give it to you.

- what do you intend to do about the mortgage? if it is in her name, are you in a position to take out your own mortgage on the house so that she can pay off her mortgage?
- do you intend to sell the property immediately or keep it and rent it out?
- if she is going into sheltered accommodation, does she have enough money to pay for it? if she is going into council funded accommodation, they will want to know what happened to the property and where the money has gone.
- is her estate above inheritance tax levels?

You need good advice about all of this. If she can't cope with this second property, why don't you just help her sell it rather than try to give it to you?

JMG_2

So your mother owns a property currently valued at £130K but with an outstanding mortgage of about £87K. She no longer wants the property and wants to give it to you.

Yes

- what do you intend to do about the mortgage? if it is in her name, are you in a position to take out your own mortgage on the house so that she can pay off her mortgage?

She will continue to pay the mortgage as the rental costs cover the mortgage. We are expecting a lump sum in less than 2 years which we could use to pay off the majority of the mortgage, at that point we could take out a mortgage for the remainder.

- do you intend to sell the property immediately or keep it and rent it out?

Her and our intention is to keep renting the house

- if she is going into sheltered accommodation, does she have enough money to pay for it? if she is going into council funded accommodation, they will want to know what happened to the property and where the money has gone.

When she goes into sheltered accommodation she will pay from income.

- is her estate above inheritance tax levels?

No idea.

You need good advice about all of this. If she can't cope with this second property, why don't you just help her sell it rather than try to give it to you?

The agent has tried to sell the house but its not moving in the current market and now its rented with a registered agent, and with a maintenance contract in place, it seems better to get some money rather than no money.
We do need good advice and I will try to contact Age concern on Monday. But to be honest I dont know who to start with for help? I'm presuming a tax specialist? A lawyer? Preferably not somebody to say invest here after a quick cursory chat. How do I go about finding a specialist? I know google is your friend and all that BUT really I need personal recommendations I feel.

tyllwyd

I'm no expert, but I don't think that what you are proposing will work - if the mortgage is in her name, she can't just give you the house without paying off the mortgage first.

I still don't understand how what you are proposing is going to help - if you are going to carry on renting out the property, she will continue paying the mortgage and needs an income to pay for sheltered accommodation, why does giving away ownership of the house help her? Why can't you carry on as you are but she gives you power of attorney to deal with her affairs?

CLAPTON

if the problem is simply the worry of managing the property then why don't you do that on her behalf?
no problems of tax or mortgages or anything

if you have other objective (tax planning etc) then you need to provide full inforamtion about her financial affairs (total assets, income etc).

John_Pierpoint

When she goes into sheltered accommodation she will pay from income.

You have got to be joking? Unless she has very considerable resources in addition to the equity in the BTL property investment.

Presumably she wants to stay in high cost UK?

What part of the country are we talking about?

Does she have any other children to help out with this approaching "nightmare"?.

JMG_2

Ok, firstly there is nobody else to help, no brothers and sisters or aunts and uncles. Secondly I am completely stupid as it just didnt occur to me that if she had a mortgage on the house she couldnt do anything till she had paid it off. Doh.!

I have no idea of her current financial affairs. I have tried previously on a number of occasions to suggest we see someone to assist with ensuring she has the best provision for her to take the holidays she wants and to make sure she can afford to have a choice over sheltered housing, to no avail. she reads the Daily Mail (?) and thinks she knows it all.

As far as I can tell, she probably doesnt have that much of an idea of what she really has. DH found a statement from 2008 down the side of the sofa. Realistically I suppose I havent tried hard enough to get to the bottom of everything before now. Presumably sheltered accommodation is somewhere in the region of £500 pw (she lives south of Leeds).

The more I think about everything the harder it seems to become. She fully owns her current house - £150k, has £35-45k in the BTL, she has 2 pensions (state and teachers). She uses the teachers pension to pay the mortgage on the BTL, with enough remaining monthly to pay for holidays (3 or 4 per year), repairs to her own house, regular savings etc. Her state pension is adequate for her daily needs apparently. I know she has numerous "bonds" that pay out annually and she reinvests but over that I have no idea for how much. her attitude has always been mind your business, which is fine but I guess now it is my business.

What type of specialist do I need and how do I find one? As I am not sure I can manage all this by myself. And I know for sure she wont listen to me.

John_Pierpoint

I have a funny feeling this is a mother daughter thing?
I had a similar situation with my mother when she was thinking of retiring (aged about 72). Up to then everything was PAYE via a small part time job and she had her own system "Look young man I'm an old woman on a pension of 750 a year plus a part time job (plus a state pension) I have no need to fill in these forms" Tax man retires from the fray.:rotfl:

Then her mother died and she inherited a chunk of a house. It was also about the time that the 10% tax band was introduced.
I managed to get her to allow me to "help" with the tax forms and got her back something approaching 200 quid.
This persuaded her that I was a good idea after all - magic money!
So doing the tax return then became an annual ritual.

Mind you it could be infuriating - I would get all the forms for something like a TESSA and she would "think about it" and then go and buy the wrong one.

Some "buddy" tipped her the wink about premium bonds, so she went out and bought the maximum holding. She did not need to she was not in the zone where the additional personal allowance gets restricted by 1 pound for every 2 pounds of extra income; which is probably what the buddy was trying to explain.
So in would come these random "prizes" and she would muddle up the cashing or reinvesting option, while the payment went "stale".

However the annual tax return ritual did mean that I had a fair idea where the investments were; when the time came to get probate.

John

Presumably sheltered accommodation is somewhere in the region of £500 pw (she lives south of Leeds).

You could phone the local council and find out how much they are prepared to pay for someone with virtually no assets (20K ish?) and then double it. In the case of my mother, my sister and I managed to get her a live in carer for 56 GBP per day (a bargain for M25 West of London) - but the price would have gone up considerably in the last 5 years I would think.
The real problem comes with the need for 24 hour care and the loss of friends (dead or don't want to visit some one who is not 100% compos mentis).

She uses the teachers pension to pay the mortgage on the BTL.

I would have thought that the rent was meant to do that?
Is it furnished?
Who manages it?

Preferably not somebody to say invest here after a quick cursory chat.

IFA's are not allowed to do that any more, they have to do a complete fact find; which could be difficult.
On the other hand mum might trust that nice young/distinguished old man more than she trusts her own daughter. Perhaps they both read the Daily Mail.

I know she has numerous "bonds" that pay out annually

I wonder if she know about the "the rule of 7x" - See Martin's news letter and the main site.
Call it 72.
You divide the rate of pensioners inflation (say 5%) into 72 (say 14 times) and that is the time it will take for mum's nest egg to halve in value.

If these "bond" things are worth more than 50K each they could be paying her GROSS income
(Don't ask me why but they were discussed on here about a week or so ago - perhaps it is an attempt to keep Arab money in London?)
This is a really good way of getting into trouble with the tax man and being required to do annual self assessment.