Gran in carehome, solution rent her house out to pay towards fees

lessonlearned

My understanding is because it is/was your grandmother's primary residence there will be no CGT. It will form part of her estate and will therefore fall under normal IHT rules.

The rental will of course be subject to income tax. There will presumably be no mortage interest relief but any other expenditure such as management fees, landlord insurance etc can be offset against her income tax bill.

Hope that helps.

claire21

Thanks LL

As I am POA there are very strict measures what I can do. There really is little else I can do now as far as IHT planning.

She is in quite a good state of health but just not safe to be on her own now at her own home. Im hoping she will have many happy years in this carehome.

I could sell the house but as you say the market is not at a great point at present and it seems pointless to sell it now when she could fund it through income rather than capital.

claire21

Jimmy

Thanks for the reply.

We have already thought we would not start yo clear the house until after xmas incase she had some kind of miracle and came home but she is getting worse and worse with her memory.

I sign all the paperwork, she wouldnt even know that her house was rented, she has no longer any real idea about money so she wouldnt ask how or she wouldnt even know that people pay for carehomes.

As I said she would still be having a decent income without renting the house, so its a bit all swings and roundabouts whether she accumulates more income each month whilst paying the fees from the sale of the house or keep the asset and let in generate further income to pay the fees. Its all much of a muchness as far as I can see when her final days come. Without a shadow of a doubt we will never 'need' to sell the house to pay or fees.

claire21

Fire fox

House buying renting and selling seemed to me like a good place to put my thread. I wasnt looking to "cut tax" and shes not "dead"

I am quite sure a mod will move it if they think it needs to be placed somewhere else.

I was basically asking is there anything you should be aware of when renting out your main home and did this seem a good idea eg renting to pay fees.

claire21

lessonlearned wrote: »

My understanding is because it is/was your grandmother's primary residence there will be no CGT. It will form part of her estate and will therefore fall under normal IHT rules.

The rental will of course be subject to income tax. There will presumably be no mortage interest relief but any other expenditure such as management fees, landlord insurance etc can be offset against her income tax bill.

Hope that helps.

Many thanks.

troubleinparadise

Sounds like a good idea to me. Your gran is fortunate in having enough funds to be able to afford a (hopefully) very good care home, and yourself to keep a watchful eye over her.

If for some reason funds become low, you still have the asset to sell to cover her fees. Given the interest rate is so low, I can't think of a better alternative in the current climate. And as you are charged with handling her finances in a transparent and responsible manner, this covers all those issues too.

Good luck - I hope she is settled and remains well cared for where she is.

claire21

Thankyou

I have so far heard she has baked a sponge cake, played some kind of tennis, danced the twist, signing, jigsaw,had a manicure,hairdresser appointment, plus a minibus trip to the nearby seaside for a stroll and a cup of tea. She gets a small sherry with her tea and biscuits late morning and afternoon, plus a small glass of wine with meals. She has better memory moments at various times throughout the day, sometimes she thinks shes on the cruise ship she use to go on every year for up to 5 months at a time, shes been round the world twice. I know this has got to be better for her than sitting at home reading the same piece of junk mail over and over again like its just been delivered. It was a very hard decision to make but deep down I know shes much safer here.

Eton_Rifle

Golden Acres. We care so you don't have to.

~ Niles Crane

Fire_Fox

claire21 wrote: »

Thankyou

I have so far heard she has baked a sponge cake, played some kind of tennis, danced the twist, signing, jigsaw,had a manicure,hairdresser appointment, plus a minibus trip to the nearby seaside for a stroll and a cup of tea. She gets a small sherry with her tea and biscuits late morning and afternoon, plus a small glass of wine with meals. She has better memory moments at various times throughout the day, sometimes she thinks shes on the cruise ship she use to go on every year for up to 5 months at a time, shes been round the world twice. I know this has got to be better for her than sitting at home reading the same piece of junk mail over and over again like its just been delivered. It was a very hard decision to make but deep down I know shes much safer here.

:eek: How many alcoholic drinks a day??? I want to move there!! :beer: Glad she is safe and well cared for.

claire21 wrote: »

Fire fox

House buying renting and selling seemed to me like a good place to put my thread. I wasnt looking to "cut tax" and shes not "dead"

I am quite sure a mod will move it if they think it needs to be placed somewhere else.

I was basically asking is there anything you should be aware of when renting out your main home and did this seem a good idea eg renting to pay fees.

If you bothered to click on the link you'd see all the threads are being started by living people and many are about the affairs of living people not the dead! You asked about inheritance tax, that is not due when you have living relatives. Had you not asked that I wouldn't have been as insensitive as to link to that board.

joerugby

It's important to look forwards with the housing market rather than backwards.

The house may well be worth less than it was five years ago but what makes you think it will be worth more in 1, 2 or 5 years time?

Might this not be a good time to diversify, i.e. cash in the house for whatever it is worth and invest the proceeds in income producing assets to pay for the care?