Buying my mums house

nelly10

Hello dear MSE people.

My mum has a house that she owns outright. She wants me to have it. What is the best way to go about owning it?

Should i buy it for a nominal amount, say £100?
Or, should she give it to me as a gift, & if so would we be taxed on it?
Or, should i get a mortgage for about £10,000 then i can use it to renovate?

Is this right? Ive never even bought a house before so am in the dark & greatly appreciate your oppinions.

Thanks, Nell

Emmzi

does she live in it or is it a "spare" house?

how old is she? if it's the house she lives in and she may have care needs, you'll get different answers to if it is a second home she owns.

nelly10

Sorry yes should have said - she's buying another to live in. She was going to rent it, but decided against it.

Emmzi

ok. so straight away we can skip past all the deprivation of capital questions related to funding care.

She can sell it to you for however much she likes, but you need to be careful of capital gains tax. if it is her main residence and she is going to buy another one cash/ mortgage/ whatever that won't apply.

http://www.hmrc.gov.uk/cgt/intro/when-to-pay.htm

if she lives for another 7 years, no inheritance tax to consider either

http://www.hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm

I would first of all however be considering if you can afford the upkeep and a small mortgage for renovation - do you work? are yu renting just now? owning can cost a bit more...

nelly10

Firstly thanks.

I currently rent, i own a small business. I'm confident that i could pay all the bills & if i had a small mortgage, i could cope with that too. The house is livable, but does need work doing on it.

TrickyDicky101

What's the value of the house currently? Would it be your only (or main) residence? From your answers above I take it that you will intend to live in it as your only home?

nelly10

Its on the market for £85000. Its on the cusp of one of the most expensive areas of the town, & next to one of the roughest. BUT, the area will be regenerated within the next few years. I do plan to live in the house as the council house i currently rent is quite small & my teens would love bigger bedrooms, but my thoughts are, that if neccessary i could rent the house out in the future.

TrickyDicky101

If it will be your main residence then CGT is probably not relevant to you (as your main residence would be exempt from CGT on a future sale) - this may not be the case if at some stage you decide to rent the property out (I only say may as there are ways the CGT can be mitigated eg lettings relief). From an IHT point of view, it comfortably falls within the single person IHT limits (around £325k at the moment) and if the total value of your mother's estate is below this then there shouldn't be any IHT complications.

gauly

I know other people have said you don't need to worry about "deprivation of assets" if your Mum goes into a nursing home but I think you may still need to look into it briefly. Obviously only you know if your mother will still have enough money to fund several years of care home fees (probably OK if she is buying another house outright) - if not then the local authority may look into this transaction to see if it was done to avoid paying fees.