Need to sell elderly mothers 2nd house

CLAPTON

JMG wrote: »

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.

No one, either amateur or professional can give advice without knowing the full financial facts and her/your objectives.
To help her effectively you need to know her incomes and her financail assetts.
You also need to understand her needs... e.g. you say she may go into sheltered housing .... do you know the difference between sheltered housing and care?

JMG_2

See I'm getting myself confused. Yes John you are correct, the rent on the BTL does pay the mortgage, and the letting agency and the maintenance company. No it isnt furnished.

I realise no one can help without knowing her objectives. Basically she wants the money to go to my son but not until he is old enough to do something sensible with it. My objective would be to minimise, as far as possible, any liabilities to either her, myself or my son, and I realise that needs to be done sooner rather than later.

Yep I know the difference between sheltered housing and care, and the escalating costs of care dependent on the level of care required. And yes I think whilst she sees sheltered housing I think I see care, as she already has short term memory loss. Hence one of the difficulties in even trying to have a reasonable conversation from 3000 miles away. I have already invoked the POA earlier this year when she managed to miss 3 flights for 3 separate holidays over a period of 3 weeks. Doc says she's ok for the time being but obviously she will get worse, so yup suspect it will be care.

zzzLazyDaisy

I may be missing something obvious, but have you/your mum considered selling the BTL and investing the money so that she doesn't have the worry of the BTL, and will be able to access the money if/when she needs it to pay for her ongoing care?

heretolearn_2

We doa lot of tax and inheritance planning (no, I'm not touting for your business!)

Issues you have here are:
she doesn't seem to want to do anything about it. There's nothing you can do without her consent. Power of Attorney kicks in if the person isn't able to arrange their own affairs, not just if you and she disagree on what to do, and even if that were to happen you'll have to be extremely careful about any actions that benefit you and your son, not her. Well, you can't do them basically, your actions have to be in her best interests only.

Until she agrees to sort her financial affairs out, there's not anything you can do.

Advise: you say people are telling you what to do with the money. In a way, that's how it is going to work in this case. Tax-planning here would normally involve purchasing a tax-product designed for these circumstances, that releases the maximum value in time within minimal tax. You should get full disclosure and be able to see that you'll benefit financially long-term, even if there are costs now, otherwise it isn't worth doing. It's part of the tax-planning involving the current situation and what will happen. No-one works for free so if you are hoping to get free planning advice on this, you won't. You might get some generic advice from Age Concern or somewhere, but it may not be the best or appropriate for you. I know you didn't say you weren't willing to pay for advice, but I'm not sure you really have that in mind either.

Most accountants are not sufficiently informed on these issues, or solicitors either on the whole picture, you need to find a specialist tax planner for the best advice.

TM1976

Based on the information here I'm not sure if there would be any tax liabilty.

CGT wise she needs to make a profit on the property and she has £10k a year of tax free gains. The property is worth £130k but she paid £167k so she has a loss, not clear but there may also be £14k of capital improvements so it's possible the property needs to rise in value above £200k before there is any sort if CGT liability.

IHT wise the nil rate band is currently £325k, her current house is £150k, she has £43k of equity in her investment property which isn't going to grow unless the value of the property does as she has an interest only mortgage. She may have other assets not mentioned here but currently these only account for £193k. If she gifts the house within outside 7 years of her death it's totally outside the scope of IHT.

Seems from the post that the problems are to do with managing the tennant/administration etc rather than the ownership of the house - do you actually just need power of attorney to deal with these issues on your mother's behalf?