Parents putting house in our names

gillykms

Hi,

I'm looking for some advice. My parents have decided that they would like to transfer their house into the ownership of myself and my brother. They are both 71, not quite as sprightly as they used to be and the reason they want to do this now is so that if the time comes that they need to go into a nursing home then the government can't use their house as capital to pay for their care fees. (I'm not sure how this works but this is what my mum has told me that can happen).

The solicitor mentioned capital gains tax but said it probably wouldn't be that much. The house's value at the minute is around £120k. He said it might be better further down the line to downsize to a cheaper property to avoid the capital gains tax.

I have been looking into CGT and have found an article in Which? that states that if a parent gives their home to a child before they die and continues to live in it then the CGT when it is eventually sold would be based on the increase in value between the date they gave us the property and the date we sell. So if say 10 or 15 years down the line my parents are in a nursing home or no longer with us and the house is valued at £200k (I've no idea if this sort of price increase would be possible) then we would have to pay CGT on £80k.

Can someone tell me should my parents probably keep the house in their name for a few more years? Has the solicitor give us duff advice as he did say he does this transfer process for a lot of people?

Any advice greatly appreciated.

Gilly

anselld

gillykms wrote: »

I'm not sure how this works but this is what my mum has told me that can happen

It doesn't work. Google deprivation of assets.

G_M

Your solicitor should have warned you about 'deprivation of assets'.

Common sense really - if an elderly person gives an asset away with the obvious intention of reducing their assets in order to qualify for benefits (eg care costs), the loacal authority can include those assets as if they had not been given away.

BigAunty

Read the factsheets on the Age UK website that covers the risks and issues associated with your plans.

gillykms

Thanks for your replies. I'm a bit confused as the solicitor did say he does this for other people all the time so I assumed it was the norm. My mum also has heard from people that this can be done. The house is in Northern Ireland so I'm not sure if there's any difference to the rules there?

Say for example we sell the house and buy a smaller house for them to live in, and the proceeds from the sale go to me & my brother. Can the government then only claim on the new smaller house or can they try to say that the money from the sale should also be included?

YorkshireBoy

gillykms wrote: »

if the time comes that they need to go into a nursing home then the government can't use their house as capital to pay for their care fees. (I'm not sure how this works...

It's quite simple really...the rest of us pay for their care via our taxes and you two end up £60K each richer.

missbiggles1

gillykms wrote: »

Thanks for your replies. I'm a bit confused as the solicitor did say he does this for other people all the time so I assumed it was the norm. My mum also has heard from people that this can be done. The house is in Northern Ireland so I'm not sure if there's any difference to the rules there?

Say for example we sell the house and buy a smaller house for them to live in, and the proceeds from the sale go to me & my brother. Can the government then only claim on the new smaller house or can they try to say that the money from the sale should also be included?

Only a minority of people go into care homes and anyway the home can't be sold when the other spouse is still alive and living in it.

Stop trying to cheat the system, it's unnecessary, unfair and it, fortunately, won't work.

lr1277

I haven't read the Age UK factsheet, so this may be on there.
If either you or your brother are married, and then divorce whilst your parent(s) are alive, the soon to be ex-partner can force the sale of the house to get to 'their' share of the assets, unless you are willing to give them 30k for not selling the house.

gillykms

Thanks again for the replies. I am not trying to cheat any system just doing what my parents want to do and what their solicitor has advised to do. I wasn't aware that it was in any way illegal. That is why I am here for advice.

Another bit which I haven't mentioned as it didn't have anything to do with my original Capital Gains Tax query is that I do have another brother who my parents do not want to place on the deeds as he has some mental health issues and myself and my other brother will be responsible for his share of the money and would plan to transfer him a set amount each month. (He is not aware of this and I am well aware there could be some heated discussions about this when the time comes). Also, in reference to Ir1277's post he has been married but is not divorced or legally separated.

patchwork_cat

We are not paying for their care, they have already paid for it via taxes and NI. The NHS was supposed to be cradle to the grave, however that has gone by the way! If they had lived in social housing all their life ( at a seriously reduced cost) they would be entitled to free care, but because they own their own home they don't qualify - how is that fair?

missbiggles1

patchwork_cat wrote: »

We are not paying for their care, they have already paid for it via taxes and NI. The NHS was supposed to be cradle to the grave, however that has gone by the way!

Care on health grounds is covered by the NHS but there's no reason for them to pay to put a roof over someone's head, to feed them and to pay their utilities!

(And, anyway, you don't know that the OP's parents have paid taxes and NI.)