Elderly mother and buying a house.

Colosolo

Hi,

My father passed away leaving my elderly mother alone, they own their own home. My mother now has severe care needs so I had to rent out my home and move in with her, the house I own with my partner was too small to accommodate her.

I gave up work for 6 months to provide her care needs and went back to work with carers going in throughout the day (we have to pay for some of these visits), until I get back at 6pm.

I don't earn enough to pay for my mothers care, she has had to sell off some shares she had and there is now no saving, so I have helped but it's not sustainable and she has no choice but to sell the house to free up money.

House prices are really high and the only way to do this is for me to get a mortgage and my mum gifting me the deposit or being down as a part owner.

The broker says part ownership is out of the question and that he can get a mortgage for me with the gift.

But then I gather I am liable to the 40% tax on the gift if she passes away within 7 years which is highly likely.

I'm not sure what the best thing to do is. I don't want to force my mother into a home, she is happy with me and I am happy to look after her.

I am looking for advice really on what my possible options are.

elsien

Have you spoken to anyone independent such as Age Uk about care costs? And is your mum claiming everything she is entitled to, such as attendance allowance? Has she had another financial assessment done given that her circumstances have changed and she's used her savings up on care? It's not legal for you to be forced to top up fees for her, the assessment is about her finances, not about yours.

From the NHS choices site:
If a local authority makes a charge for care at home it will use the same upper capital limit set for residential care purposes. However, it can use more generous limits if it wants to do so. For more information about charging for residential care see NHS Choices links.
If it uses the same limits as the residential charging guidelines, the upper limit for capital is £23,250. If capital is above the upper limit the person you're looking after may have to pay the full cost of their services. There is also a lower limit of £14,250. If their capital is between £14,250 and £23,250, £1 a week for every £250 is taken into account as income.
The value of the property in which the person receiving care lives should not be taken into account.
In general, the guidance suggests that the same rules that apply to charging for residential care should apply to care provided at home.
However, it is not always clear how the residential care charging rules apply if the care is provided at home. If the person you're looking after has any concerns about the way in which the rules are being applied they can ask the local authority to use its discretionary powers. Alternatively, they can make a complaint.


It seems to me that if your mum's only asset is now her house, then this should be disregarded for the financial assessment if she's still living in it. In your place, I'd be getting further advice about whether she should still be paying for her care before looking into remortgaging etc. And be pointing out to the local authority that your mum continuing to live with you is a heck of a sight cheaper for them than her being in residential care.

Phone Age Uk and double check where your mum stands on paying for care in her current circumstances. There is a fact sheet towards the bottom of this page.
http://www.ageuk.org.uk/home-and-care/help-at-home/paying-for-care-and-support-at-home/

longforgotten

Firstly, what a wonderful, caring daughter you are to look after your Mum as you do. She must be very proud of you.


Have a read of this link with regard to inheritance tax and see if it applies to your Mum and the tax threshold possibly being £650,000


https://www.moneyadviceservice.org.uk/en/articles/will-you-have-to-pay-inheritance-tax

Colosolo

elsien wrote: »

It seems to me that if your mum's only asset is now her house, then this should be disregarded for the financial assessment if she's still living in it. In your place, I'd be getting further advice about whether she should still be paying for her care before looking into remortgaging etc. And be pointing out to the local authority that your mum continuing to live with you is a heck of a sight cheaper for them than her being in residential care.

Phone Age Uk and double check where your mum stands on paying for care in her current circumstances. There is a fact sheet towards the bottom of this page.

Thanks, we have done all this and more. She has the maximum allowed care that is free due to pension credit. They even went to a panel to try and raise more but they couldn't do it.

This isn't enough for my mothers needs and the house will need to be sold to provide the money.

Ideally my mum would be part owner of a new house but apparently that's not allowed in the UK where everyone needs to be on the mortgage. Is that correct?

If she gifts the money I have to pay 40% on her death in tax. If she willed it to me I gather it would be no tax due to it being below the 350 thousand threshold. But if she gifts it then I will have to pay the tax correct?

elsien

Are they meeting your mum's eligible assessed needs, or it is that you both feel that she needs more help than the assessment says?

Going to panel is the local authority balancing the books, - sometimes if they're not meeting their own criteria this can be challenged through the complaints procedure. You may already have done this, thought I'd mention it just in case.

tyllwyd

Colosolo wrote: »

... If she gifts the money I have to pay 40% on her death in tax. If she willed it to me I gather it would be no tax due to it being below the 350 thousand threshold. But if she gifts it then I will have to pay the tax correct?

I didn't think it worked like that - it should be a potentially exempt transfer (PET) so if she passes away before 7 years is up it will be counted as part of her estate. But if the estate is below the threshold, no tax is payable
http://www.hmrc.gov.uk/inheritancetax/pass-money-property/exempt-gifts.htm#4

theoretica

Have you also looked into equity release mortgages?

lonestarfan

Depending on if the proeprty is mortgage free which I think you mean it is then your mum might be able to release money in her own name and not need to involve you buying off her and gifts etc. It depends on how much money she wants to raise and her income. Your broker should know. National counties building society do higher ages I believe or as the poster above says look into equity release.

Colosolo

tyllwyd wrote: »

I didn't think it worked like that - it should be a potentially exempt transfer (PET) so if she passes away before 7 years is up it will be counted as part of her estate. But if the estate is below the threshold, no tax is payable

Thank you. The estate will be below the threshold

It's below 650 thousand which is tax free when taking into account my dads part. That is correct?

theoretica wrote: »

Have you also looked into equity release mortgages?

We did consider this, my mums house is very large and it makes sense to downsize anyway for bills etc. She has the heating on 24/7 and spends her time in a very large through lounge. The bills are horrendous.

So ideally she would move into something smaller where we can afford the bills.

getmore4less

For most people.....

It is almost impossible for a gift to result in more inheritance tax than not gifting.
It is even rarer for the recipient of gifts to ever have to pay tax it is the remaining estate

How much will you release, changing houses will use up a lot of money.

OK downsizing anyway.

Where is your partner in all this.
is this new house a viable longer term option and selling the rental

Colosolo

getmore4less wrote: »

For most people.....

It is almost impossible for a gift to result in more inheritance tax than not gifting.
It is even rarer for the recipient of gifts to ever have to pay tax it is the remaining estate

How much will you release, changing houses will use up a lot of money.

OK downsizing anyway.

Where is your partner in all this.
is this new house a viable longer term option and selling the rental

For my mum to downsize in the area it would be to a bungalow.
The cost of a bungalow is around £500,000 , she would gift £200,000 and myself and my partner would get a mortgage for the rest and pay the stamp duty with savings.

That would leave around 300,000 for her to keep and contribute towards her care.

It would prefer my mother was a part owner of the property but apparently we couldn't get a mortgage in that situation.