Inheriting a house

Grouperbobby

Not sure I am in the right thread so apologies if not. The query I have is that my wife's gran wants to sign her house over to her as she no longer lives in it. We were going to rent it out and put the money in to pensions as we have no private pension of our own. I have now realised though that we would have to tell tax credits about this income even though we wouldn't be seeing the money yet and we would lose out on our tax credits which pay our monthly bills. If we don't rent the property do we still need to tell them about the property? Is it possible for a third party to rent out the property and pay in to a pension for us? As you can tell I know nothing about the subject. All help would be appreciated

Bluebirdman_of_Alcathays

You obviously would rent the property, nobody in their right mind would just leave it empty. Even if you delegate rent collection to someone else, you are still the beneficial owners, and are still running a rental business, so the income would be attributable to you.

You not only have to tell 'tax credits', you also have to pay income tax on the rent. It is income, just the same as having a job. Also if your wife's gran requires state funded care, they can legitimately take the house off you if they think this arrangement is just a way to avoid paying - Google 'deprivation of assets'. Lots to consider, you should take professional advice.

Caz3121

Grouperbobby wrote: »

The query I have is that my wife's gran wants to sign her house over to her as she no longer lives in it.

your wife's gran should also get professional advice. Owning a property that you do not live in would mean that means tested benefits would not be payable...signing the property over to someone else does not change that as she would be treated as having giving £x amount away and be treated as still having it
It may be better for her to rent it out to give herself an income with something in her will to transfer it to you at a later date

xylophone

Is your grandmother on benefits? Is she in care? How is the care funded?

http://www.payingforcare.org/deprivation-of-assets

If you are in receipt of means tested benefits, presumably you are required to advise any change of circumstances etc?

You would need to advise HMRC of rental income.

Grouperbobby

Thanks for the replies. Fortunately she's being cared for in the family home. We're going to go and see a solicitor about which way to go

Savvy_Sue

Grouperbobby wrote: »

Thanks for the replies. Fortunately she's being cared for in the family home. We're going to go and see a solicitor about which way to go

That is lovely, as long as it's workable. However, do bear in mind that her needs may increase, substantially, and the ability of the family to care for her may decrease, significantly. And these things can happen unexpectedly and quite suddenly. Even devoted families who swore X would always be cared for at home may find that it's all a long way beyond them.

So even though 'deprivation of assets' may not look like an issue now, it could become one. And unless you or the family would be in a position to make up for the lack of those assets if Gran's given them to you, I'd try to find a way which means the resources the house represents are available to Gran until her dying day.

And it doesn't sound as if you having Gran's house would be that useful to you anyway, unless the rent you'd receive would outweigh the loss of the tax credits.

On pensions, if your employers are not yet involved in Auto-Enrolment, they soon will be, at which point there will be a pension scheme easily available to you.

smallgingerone

With regards to Child Tax credits, any payment made in to a pension can be used to reduce your income by the gross amount of the contribution. So if you were to earn £4,000 net from rent you could claim a £5,000 (the gross figure) reduction in your income declared on the Tax credits form.


http://www.help.entitledto.co.uk/viewhelp.aspx?sid=4&helpfile=taxcredpensioncont


this helps explain it.


However, as mentioned by other posters this does address any potential deprivation of assets issues.

sleepymans

Take the rent and sign off from all benefits....you know it makes sense!!