Purchasing Parents Home

rawbob

My Mum passed away last year. My Dad has been sorting finances out and has asked my siblings and I if any of us wanted to buy his home as an investment and so he can give us the money from the sale and see us enjoy it now rather than when he is gone.

I am the oldest of 3 kids and my Dad stays in a 2 bedroom flat that we estimate would be worth £50K. We stay in Scotland. My Dad has no cash worries although he does not have any huge savings. He is comfortable and very active. Although he has a recurring issue with cancer that will eventually catch up with him. For now, Chemo every 3 years keeps it at bay.

It looks like I will be the only one in a position to buy but I am unsure about a few things and hope one of you can advise me.

In the event that I make the purchase. I would receive a 33% discount from the house price and the sale money would be split between my siblings.

If I purchase and my Dad needed to go into care, would I be liable to lose the house or have to pay a sum to my dad's care?

Does a sale provide more protection from future claims on the home than having the home signed over would?

AdrianC

If your father dies within 7 years of the gift of the house's value, then IHT may be payable.
If your father needs residential care funding by the local authority, then gifting the value of his most significant asset would certainly be seen as deprivation of assets.

paddedjohn

Where would your dad live if you bought his home? If you need a mortgage to purchase the property I'm sure he won't be allowed to stay there.

Pixie5740

Deprivation of Assets

Keep_pedalling

Apart from the depreciation of assets issue, how are your 2 siblings going to feel about that discount? They would be loosing out big time there.

davidmcn

Pixie5740 wrote: »

Deprivation of Assets

Assuming the OP's father also lives in Scotland then he probably wants the Scottish version of that factsheet:

http://www.ageuk.org.uk/Documents/EN-GB-SC/Factsheets%20-%20Scotland/Factsheet%2040s%20-%20Transfer%20of%20assets%20and%20paying%20for%20care%20in%20a%20care%20home.pdf?dtrk=true

brodawel

Keep_pedalling wrote: »

Apart from the depreciation of assets issue, how are your 2 siblings going to feel about that discount? They would be loosing out big time there.

I think OP means they (i.e. the 3 siblings) would each get 33%. He would get his 33% by paying 33% less, the remaining 66% would be split between the other two siblings.

I'm not saying any of this is legal btw, I've honestly no idea.

AnotherJoe

I think this is a poor idea. Its not as if he is giving them £100 grand, its going to work out at about £10k each, not going to change their worlds surely.
Then you get an extra lot of hassle being an owner of a second property, an extra mortgage to pay (if you can get one with a relative in the flat) and if it rises in value potential issues with siblings wanting their cut of that if you sell it (or even, wanting you to sell it even if you dont)

cloo

Yes, I'm not sure it seems worth it for a relatively low-value property, I'm not sure the costs incurred stack up.

CLAPTON

rawbob wrote: »

My Mum passed away last year. My Dad has been sorting finances out and has asked my siblings and I if any of us wanted to buy his home as an investment and so he can give us the money from the sale and see us enjoy it now rather than when he is gone.

I am the oldest of 3 kids and my Dad stays in a 2 bedroom flat that we estimate would be worth £50K. We stay in Scotland. My Dad has no cash worries although he does not have any huge savings. He is comfortable and very active. Although he has a recurring issue with cancer that will eventually catch up with him. For now, Chemo every 3 years keeps it at bay.

It looks like I will be the only one in a position to buy but I am unsure about a few things and hope one of you can advise me.

In the event that I make the purchase. I would receive a 33% discount from the house price and the sale money would be split between my siblings.

If I purchase and my Dad needed to go into care, would I be liable to lose the house or have to pay a sum to my dad's care?

Does a sale provide more protection from future claims on the home than having the home signed over would?

why doesn't he simply sell the house and give you each a third of the proceeds?
if you bought it, what would you do with it?
what would his total estate be worth today?

G_M

As Pixie says: Deprivation of Assets.

You don't say where dad will live, but I'm guessing he will continue to live in the flat after selling it to you? So

*Capital Gains Tax will be due if/when you sell (uness you also move in and it becomes your primary home)

* Inheritance Tax. The gift of the cash he receives from the sale would fall within the 7 year rule, so would only be tax free if he survives 7+ years. Alternatively, HMRC might consider that what has actually happened is the property was gifted. but as he still lived in it, it would be a 'gift with reservation', so would be taxable on his death (even if beyond 7 years).

* Care Home fees etc. As said above, Deprivation of assets would apply so the property value would be assessed.

* you may be a landlord, with all the LL obligations.

If however, after sellig to you, dad was planning to move out and live elsewhere, some of the above would vary.