Selling a house for cost

teddysmum

steampowered wrote: »

I don't see any real reason why you can't do this. You should get a solicitor to help you but it sounds perfectly achievable to me.

You would effectively just be selling the property to your daughter at a lower value than the house is actually worth. You can do this. However you may find that there is a capital gains tax liability if the sale is treated as taking place at market value.

In terms of protecting your interest in the property, you could consider (1) taking a life interest in the property which entitles you to stay there for life, or (2) a long lease which terminates on your death.

If you want to pay your daughter, you can simply pay your daughter money every now and then as a gift. It doesn't need to be rent linked to the house.

Contrary to what other posters have suggested, I don't think this would result in your daughter being treated as your landlord and you as a tenant.

Contrary to what other posters have suggested, I don't think this would be seen as 'deprivation of assets' for the purposes of means testing care home expenses. In order for 'deprivation of assets' to apply a significant factor in the reason why you sold the house must be to avoid care fees. That is not your motivation so I think you would be OK.

Also, even if you were seen to be trying to deprive yourself of assets to avoid care fees, you wouldn't be any worse off than you are now because the authority would simply treat you as if you still owned the house.

You would also find it difficult to prove what you are suggesting. Councils are not stupid (well not when collecting rather than spending our money) and will be very wary, knowing that people are out to save their inheritance.


You mention giving away a chunk of house would not be a problem as the OP would be treated as thought they still owned the house. You do realise that this would mean selling the house to pay the bills (as is the case when a single occupant goes into care), but if the council has to wait for it's money it will charge interest and at a high rate .


If it was fine just to sell your home at a knock down price and then claim free care, nearly everyone would be doing just that.

AnotherJoe

kdb550 wrote: »

I bought a house 10 years ago, the house value as increased by approx 80k since. I am about to retire and will no longer be able to afford the mortgage.

I want to sell this house to my daughter for what I paid for it and I will use the money from this to pay off the mortgage. I will then continue to live in the house and pay my daughter rent.

please can anyone tell me the pitfalls or tax implications of this.

Why don't you just do equity release ?

booksurr

steampowered wrote: »

I don't see any real reason why you can't do this. You should get a solicitor to help you but it sounds perfectly achievable to me.

of course it is possible, the question is what are the implications given his objective is he needs money to clear his mortgage - the key fact you have missed.

steampowered wrote: »

You would effectively just be selling the property to your daughter at a lower value than the house is actually worth. You can do this. However you may find that there is a capital gains tax liability if the sale is treated as taking place at market value.

no, we must assume the property he lives in and will sell has always been his only/main home therefore he will get 100% CGT relief when he sells no matter to whom or for how much

steampowered wrote: »

In terms of protecting your interest in the property, you could consider (1) taking a life interest in the property which entitles you to stay there for life, or (2) a long lease which terminates on your death.

If you want to pay your daughter, you can simply pay your daughter money every now and then as a gift. It doesn't need to be rent linked to the house.

so he would be living in a house he previously owned having transferred the title to the daughter at a discount to enable him to clear the mortgage but not make a "profit". That means for IHT purposes, life interest not withstanding, it is a gift with reservation of benefit as so unless he pays market value rent it will remain in his estate. The realistic question then is whether his estate will be above the IHT threshold or not - given the forthcoming changes to main residence thresholds for IHT it would be foolish to sign away a property if you will not be exposed to the tax you are trying to shelter from in the first place.

steampowered wrote: »

Contrary to what other posters have suggested, I don't think this would be seen as 'deprivation of assets' for the purposes of means testing care home expenses. In order for 'deprivation of assets' to apply a significant factor in the reason why you sold the house must be to avoid care fees. That is not your motivation so I think you would be OK.

Also, even if you were seen to be trying to deprive yourself of assets to avoid care fees, you wouldn't be any worse off than you are now because the authority would simply treat you as if you still owned the house.

agreed, for very obvious reasons there is much greyness about how and when a council decides to pursue a claim of deprivation. Only time will tell in each case...

Lioness_Twinkletoes

Pixie5740 wrote: »

How is your daughter going to pay for your house? Cash or will she need a mortgage? If the latter then she could be looking at a regulated BTL mortgage.

Your daughter will be your landlord with all the legal responsibilities that go along with that. The rent you pay her will be subject to income tax. Assuming your daughter doesn't live with you then Capital Gains Tax will be due when she eventually sells your home. As you will continue to live in the property then the £80k you gift her will be subject to Inheritance Tax (may or may not be an issue depending on the size of your estate when you pass). Depending on whether or not this is the only property your daughter own or will ever own there could be the issue of the additional 3% SDLT. In other words you could potentially be setting your daughter and your estate up for a quadruple tax whammy.

Should you need residential care in the future you will be considered to have deliberately deprived yourself of assets so the council could still put a charge on the property anyway.

If you fall out with your daughter, she gets married and then divorced you could find yourself homeless.

Have you spoken to a mortgage broker to discuss your options?

Apart from that, it's a great idea! :rotfl:

However, if you are determined to go ahead, the question that has been raised about how you are going to pay the rent is a pertinent one. Are you considering applying for LHA? That might cause some issues.

Marvel1

As your daughter is going to be involved in the landlord business, does she know what her responsibilities are?

AnotherJoe

cjdavies wrote: »

As your daughter is going to be involved in the landlord business, does she know what her responsibilities are?

Evicting the tenant via an S21 if he doesn't pay the rent on the dot? :rotfl:

Lloyd90

steampowered wrote: »

If you want to pay your daughter, you can simply pay your daughter money every now and then as a gift. It doesn't need to be rent linked to the house.

Contrary to what other posters have suggested, I don't think this would be seen as 'deprivation of assets' for the purposes of means testing care home expenses. In order for 'deprivation of assets' to apply a significant factor in the reason why you sold the house must be to avoid care fees. That is not your motivation so I think you would be OK.

1) The first thing you said (That I've left in) sounds like illegal tax evasion.
2) The second one, massively underselling her house to her daughter but continuing to live in in also definitely sounds like deprivation of assets.

Caz3121

kdb550 wrote: »

I am about to retire and will no longer be able to afford the mortgage.

I will then continue to live in the house and pay my daughter rent.

what is the difference in the cost of the mortgage v's the cost of the rent?
Have you looked into the SMI help for mortgages?
You would not be able to claim housing benefit for the rent but you may be able to get help with the mortgage