Mum paying off my mortgage and moving into my house.

Wallbasher

Hi Guys and Girls.


Just looking for some advice and wondering if I am going to hit any legal hurdles and the best way to go about things.


So basically my mum is not well and has a muscle wasting condition so I have decided to move her into a bungalow that I own.


She is selling her house and using the money gained from that to clear her mortgage (20k) and pay off the remaining mortgage I have on mine (60k)


However I would like to keep the house in my name as I own the bulk of the equity, she is fine with this.


Is there any legal confliction I need to be aware of ?

Also is it just a case of contacting my mortgage provider and setting up a transfer with the bank to the mortgage account or do I need to do it through a solicitor ?


Much appreciate any help


Wall Bash

Browntoa

If your mum needs care down the line then it's deprivation of assets.

Council will look through her finances and spot the house sale and transfers of money to you. They will then add that value to her assets pushing her over the threshold for council funded care ( £23,000)

Cakeguts

It will work better if she pays off her mortgage but doesn't pay off yours and keeps the £60k. At least that way if she has to pay for care you won't have to sell your house to get the £60k back.

xylophone

Your mother could lend you the money against a charge on your property provided that you are confident of being able to remortgage at need.

00ec25

Wallbasher wrote: »

She is selling her house and using the money gained from that to clear her mortgage (20k) and pay off the remaining mortgage I have on mine (60k)

oh boy....

1. The money she pays to you is your income. You will need to declare it for income tax purposes and pay tax on it assuming you have a repayment mortgage and therefore part of what she pays you is the capital element of your own mortgage. Capital repayments increase your net wealth and are therefore taxable.

If instead you have a interest only mortgage then her payment will be offset by your interest charge and no income tax will be due.

2. Your mother is paying you rent. You are her landlord, and are required to meet all the obligations of a LL in terms of safety certificates, EPC and, if applicable in your area, registration

3. As she will be paying you rent (the fact you spend "her" money on your mortgage is irrelevant, she would have a better chance of arguing against deprivation of capital since she is paying to live somewhere. But in counterpoint the fact the somewhere is owned by her son would heavily count against her since it is obviously a poor attempt at transferring her wealth to you (albeit in a piecemeal manner) in order to evade inheritance tax.

as others suggest, a re-think would be good, bearing in mind if you do go down the loan route and she ends up in care the council could call in the loan since it would be money owed to her that she could then spend on funding her own care. Whether the council would accept a deferment in that circumstance is a matter for you, your solicitor and your ability to re mortgage to release the cash to repay the loan .

Comms69

00ec25 wrote: »

oh boy....

1. The money she pays to you is your income. You will need to declare it for income tax purposes and pay tax on it assuming you have a repayment mortgage and therefore part of what she pays you is the capital element of your own mortgage. Capital repayments increase your net wealth and are therefore taxable.

If instead you have a interest only mortgage then her payment will be offset by your interest charge and no income tax will be due.

2. Your mother is paying you rent. You are her landlord, and are required to meet all the obligations of a LL in terms of safety certificates, EPC and, if applicable in your area, registration

3. As she will be paying you rent (the fact you spend "her" money on your mortgage is irrelevant, she would have a better chance of arguing against deprivation of capital since she is paying to live somewhere. But in counterpoint the fact the somewhere is owned by her son would heavily count against her since it is obviously a poor attempt at transferring her wealth to you (albeit in a piecemeal manner) in order to evade inheritance tax.

as others suggest, a re-think would be good, bearing in mind if you do go down the loan route and she ends up in care the council could call in the loan since it would be money owed to her that she could then spend on funding her own care. Whether the council would accept a deferment in that circumstance is a matter for you, your solicitor and your ability to re mortgage to release the cash to repay the loan .

I’m not sure I agree; this seems like a gift

Wallbasher

Thanks for the replies guys!

So would I be able to sell her the house for 60k without incurring any legal problems?

Inheritance tax is well below the threshold to be incurred.

As for the care side of things, if it comes to that I would just remortgage and pay..its only money.

getmore4less

Check out gift with reservation and pre owned asset complications.

Probably exemptions that will kick in.

For her own security she could buy a share but not essential.

Loan is another option which would give her money(not taxable) as you pay it back.

Would help her cover the bills.


(asumption is you are not living there)

tlc678910

Wallbasher wrote: »

So would I be able to sell her the house for 60k without incurring any legal problems?

.

Hi, you wouldn't really want to put the whole house in your mum's name either as, assuming it is worth more than 60k your own equity would then be used up if required to pay for your mum's care in the future as the whole house would be her asset.

Perhaps the best way to do it would be for your mum to lend you the 60k and you pay off the mortgage with a solicitor putting a charge against the property to protect your mum's money. If your mum needs her money in the future for example to pay for care, you would need to remortgage or sell the property.

This loan/charge would be an asset of your mum's so If it was not repaid to your mum it would one day form part of her estate. This would protect siblings or any other beneficiaries If your mum wants to divide her estate between her children for example. Again you would need to remortgage or sell up if you needed to release money to give a share to siblings.

If you own this property but don't live in it you may have to pay capital gains tax if you want to sell it in the future. (If the value has gone up enough since you have owned it).

Edit before you pay off your mortgage find out If there is an early repayment charge and calculate if it is worth waiting before paying it off until the charge expires.
Tlc