Mums house, can we rent ourselves or have a licence to occupy?

Dixy_3

Can any one please help, I am unsure where to go next. My Mum has recently had to go into a care home and is no longer living at her home. She has dementia and I have POA for property and finance, the house is left to me in her will as it was always her wish that me and my wife moved in after her death. I have no siblings. Obviously plan A is not possible at this time, so we are looking for a plan B. I have been told that if we wish to buy the house, we need to pay market value, which is not possible as we are retired and our current property is worth about half the value of Mums. I have been told we are allowed to rent her property out, so long as the money earned is used for her benefit. She is able to pay her care home fees for the next year or 2 from her savings etc, but her earnings are about 25% of the fees, so savings are going down fairly quickly. The problem would be if she lives longer than this, she is 93 and in reasonably good physical health and is very happy where she is, so we don't want to have to move her. I was wondering if we could either rent the house ourselves from mum or we could get a licence to occupy, then sell our own home. The money we get from the sale of our house, would then be used to pay her fees and would obviously save some money as we would only be running 1 house. I have minimised her bills, but there is only so much that can be done. I believe that if we paid rent then this becomes taxable, I am also unsure if we would pay tax on the sale of our property. If we could take out a licence to occupy and then just pay her fees ourselves, maybe avoiding the tax implication to her? If we occupy the house can we take on the bills etc, or does she still have to pay them from her account? I was considering going to see a financial adviser to see what they advise, but wondered if any cleaver people on here have any thoughts or ideas before taking the next step. Thanks in advance.

zagubov

Dixy_3 said:

Can any one please help, I am unsure where to go next. My Mum has recently had to go into a care home and is no longer living at her home. She has dementia and I have POA for property and finance, the house is left to me in her will as it was always her wish that me and my wife moved in after her death.

I have no siblings. Obviously plan A is not possible at this time, so we are looking for a plan B. I have been told that if we wish to buy the house, we need to pay market value, which is not possible as we are retired and our current property is worth about half the value of Mums.

I have been told we are allowed to rent her property out, so long as the money earned is used for her benefit. She is able to pay her care home fees for the next year or 2 from her savings etc, but her earnings are about 25% of the fees, so savings are going down fairly quickly.

The problem would be if she lives longer than this, she is 93 and in reasonably good physical health and is very happy where she is, so we don't want to have to move her. I was wondering if we could either rent the house ourselves from mum or we could get a licence to occupy, then sell our own home. The money we get from the sale of our house, would then be used to pay her fees and would obviously save some money as we would only be running 1 house.

I have minimised her bills, but there is only so much that can be done. I believe that if we paid rent then this becomes taxable, I am also unsure if we would pay tax on the sale of our property. If we could take out a licence to occupy and then just pay her fees ourselves, maybe avoiding the tax implication to her?

 If we occupy the house can we take on the bills etc, or does she still have to pay them from her account? I was considering going to see a financial adviser to see what they advise, but wondered if any cleaver people on here have any thoughts or ideas before taking the next step. Thanks in advance.

Paragraphed it so more people will read it and hopefully provide advice

Dixy_3

I did set out like this? Not sure how it got changed?

Thanks anyway.

dimbo61

Do you really want to live in Mum,s house ?
Your retired yourself so do you want to pay rent ?
Your currently living in a paid for home while living on your pensions.
Would it not be better with POA to sell the property now while in good condition and invest the funds in savings accounts to help pay for Mum,s nursing home fees for years to come.

sourpuss2021

dimbo61 said:

Do you really want to live in Mum,s house ?
Your retired yourself so do you want to pay rent ?
Your currently living in a paid for home while living on your pensions.
Would it not be better with POA to sell the property now while in good condition and invest the funds in savings accounts to help pay for Mum,s nursing home fees for years to come.

With house prices rising, and inflation soaring, it would be better financial sense to keep hold of the more expensive of the two properties, i.e. his Mum's house, rather than letting the proceeds of sale depreciate in the bank.

dimbo61

Will the rental income cover the care home fees ?
What happens if the Tenants stop paying the rent and take 12+ months to be  evicted.
What happens if the boiler fails 3 days after a family with 3 young kids move in on Xmas day ? New boiler which the plumber can't fit for 3 weeks while putting up tenants in a hotel.
House fire or flood !
Break-in or void periods.
Tenant injuries themselves falling down stairs after reporting loose carpet 3 months before. 
Complaints from neighbours ? 
Dispute with neighbours and tenants.
Anti social behaviour
Money in the bank is boring but being a LL is no walk in the park

turnitround

dimbo61 said:

Will the rental income cover the care home fees ?
What happens if the Tenants stop paying the rent and take 12+ months to be  evicted.
What happens if the boiler fails 3 days after a family with 3 young kids move in on Xmas day ? New boiler which the plumber can't fit for 3 weeks while putting up tenants in a hotel.
House fire or flood !
Break-in or void periods.
Tenant injuries themselves falling down stairs after reporting loose carpet 3 months before. 
Complaints from neighbours ? 
Dispute with neighbours and tenants.
Anti social behaviour
Money in the bank is boring but being a LL is no walk in the park

Think you may have misread the opening post. Doubt the OP will be evicting himself.

JGB1955

Mum is asset rich but cash poor.  It makes sense to sell the house and invest the funds wisely, with the help of an IFA, to provide a monthly income.

theoretica

I think there are two aspects of this.

1) With POA you have a duty to act in your mother's best interest

2) So long as enough money is available to pay for your mothers care, the council are unlikely to mind where exactly it comes from.

You could consider paying market rent to your mother, and making up any shortfall in her needs by lending her money and documenting the loan.  Maybe you could buy half your mother's property from her.  But, if her needs were great enough you might need to sell her house anyway, pay back any loan you had made her, and use the rest of the value for her care.

dimbo61

Well the OP can't buy Mum,s house as he is retired and her home is worth twice what he will get from the sale of his family home.
If he moved into Mum,s house can he afford to pay rent from his pensions ?
I know he can then put his house on the market but it might not sell  for months/ years.
Only the poster can decide but maybe speaking to a solicitor and local estate agents might help

Keep_pedalling

Unless you are desperate to move back into your old family home, then you should sell otherwise this is going to be a nightmare to manage.

if you really want the house then one option could be to sell your house and purchase a share of your mums house, the money raised from the sale can be used fund her further care if needed. You should take legal advice if considering anything like this.