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

Mojisola

It is her wish that you move into the house - but would you and your spouse have chosen it as your home?
As it's so much more expensive that your property, can you afford the regular bills and maintenance?
Talk it through honestly as a couple - would it be better to sell it, secure the funding for your mother's needs and stay where you live or, if you end up with an inheritance, move to the forever home of your own choosing? 

Dixy_3

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

It would be us, renting the property, so that isn't an issue.

sheramber

Have you researched the regulations about letting a house and what checks and certificates are required.

The rent will be your mum's income so you as POA will have to deal with HMRC  on her behalf. It cannot be considered your income.

Dixy_3

sheramber said:

Have you researched the regulations about letting a house and what checks and certificates are required.

The rent will be your mum's income so you as POA will have to deal with HMRC  on her behalf. It cannot be considered your income.

Yes have been looking on HMRC and other sites, which promptedthe enquiry here. We are both keen on the move, but not sure of where to go for good advice. Solicitors or financial advisor who deals in property? Maybe need both?
It's good to get alternative views, sometimes gives food for thought.

GDB2222

You asked whether you pay tax when you sell your own property, and the answer is no, assuming you sell it shortly after moving to mum’s house.

Your mum must pay tax on her rent from you, less any maintenance etc, which means keeping accounts and filling in a tax return for her. 

You would need to pay a fair market rent.  Can you afford to do that?

GDB2222

Hopefully, mum will live many years. In which case, if you do as you propose, her house may need to be sold to pay for her care, anyway. By then, you would have sold your own house. So, this could end very badly.

getmore4less

The biggest risk is the money runs out 

Looking for ways to make it last the longest,


some things to consider

if her income covers 25%  can you afford the other 75%?

if you sold your house bought 50% and moved in how long would that last before you needed to top up from your income..

Could you afford market rent for the other 1/2

If you bought the property at 100% (with cash and a debt) could you afford to contribute(pay down the debt) over time.

what about 
50% Lifetime mortgage, interest only, with drawdown and the option to pay it off when the time comes if any cash left 
rates quite high but drawdown option could minimise that

You buy the house at 100% but only draw down the money when the other sources run out.



Do you have any kids that could help


Best interest can include what would the donor have done if they could have make the choice.

As POA you don't have to take on work you don't want.

That means even if renting the property could be the most appropriate you don't have to do that option if you don't want to be a landlord.

I think it would be reasonable to think that the donor would have wanted the OP to move in If that option would give sufficient finance to fund the care.

Bendy_House

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.

Hi Dixy.

This is my best understanding of the situation and your options. It might not be accurate...

1) If you sell your house, you won't pay tax on it as it's your sole home.

2) Your mum's house is your mum's house, and is her main asset after her savings. Once her savings run out, she will be expected to (as her POA, 'you' will be expected to) sell her house to release these assets to continue paying for her care. 

HOWEVER, what is the current situation with this? Hasn't/isn't the law changed/changing to protect the cared person's home to a certain value? Have a Google on this. What's the current threshold? And where does your mum's house sit on this in value?

3) Depending on the answer to (2), if you sell your own home and move into your mum's, you could well find yourself being forced to sell IT too, to release funds for your mum's continued care. Of course, you'd use the funds from your own house's sale first, and 'hopefully' (you know what I mean) this would be enough, so you'd get to keep your mum's house as she wished. But you do need to clarify if there is a risk you MAY also need to sell your mum's, and that will likely come down to the 'threshold' figure I mentioned before.

In theory, this worst case scenario shouldn't leave you any worse of, as part of the house's value is rightfully yours, so you shouldn't be any worse off financially, but will now need to find another home, as both your own and mum's will have been sold! It would need clarifying/provable to all potentially interested parties that the situation IS as set out here; you have paid for your mum's care up to the value of your own home's sale, and therefore 'all' that remains in your mum's house is the balance. IE, you should ensure, with the correct docs (whatever they are), that YOUR house's assets are protected and cannot be taken.

(4) Options? How much rent could you raise from YOUR home if you moved into mum's? Would it cover your mum's care once her savings run out? 

How much rent would your mum's house raise - would THAT be enough?

If the answer to either of these is 'yes', then that should protect both sets of assets, yours and her's.

How important is your mum's house to you personally, other than as an asset? Is it the home you DO want for you and your family?

If the house is largely an 'asset', then the option of selling it and investing the money might not be daft; the housing market is 'likely' to cool down, and interest rates are 'likely' to go up, so between these two scenarios, the proceeds could well gain more invested than it would remaining as property. But that could obviously go either way...

Dixy_3

Thanks for all the replies and ideas.

Thinking cap time.

Mardle

Is your mother getting Attendance Allowance? If not have you tried claiming it for her?