Tax considerations - selling house, buying two flats, daughter with learning difficulties

JLRetired

An elderly couple currently live in a large detached house with their daughter who has mild learning difficulties and is dependent on them. She pays no rent. Due to ill health of the mother the house is being sold and the plan is to buy two flats in a retirement 'court', one for the daughter (who will be supported longer-term by siblings). What tax considerations need to be made? e.g. if both flats are bought in the name of the parents, or one bought in the name of the daughter. I don't believe there is a simple answer but it would be helpful to understand what different solutions there might be and the pros and cons of each. The daughter will have sufficient funds when the parents die to provide her with an adequate income. 

housebuyer143

Do they have power of attorney for financial affairs for her? Might be they can buy the flat in her name and avoid the additional stamp duty?

Sarahspangles

This query might be more relevant to the Deaths, Funerals, Probate board as it relates to decisions made in the final years of life?

JGB1955

JLRetired said:

 the plan is to buy two flats in a retirement 'court', one for the daughter (who will be supported longer-term by siblings). 

This just screams out at me.  How old is the daughter? how old are the siblings?  Are they REALLY happy to support their sibling for 10/15/20/25/30/35/40 years? Can you be sure they can sustain it for life? If so, they are real saints.  I'm not sure that that's a burden I would want to plant on my other children. I would rather sort out alternative arrangements now.

JLRetired

housebuyer143 said:

Do they have power of attorney for financial affairs for her? Might be they can buy the flat in her name and avoid the additional stamp duty?

Her siblings have power of attorney but the money to buy the flat would come from the sale of the current family home, for which she is not a co-owner.

JLRetired

Sarahspangles said:

This query might be more relevant to the Deaths, Funerals, Probate board as it relates to decisions made in the final years of life?

I wondered about that, it is definitely a factor, but I'm also interested in the implication if the parents buy the flat and gift it. The 7 year rule is unlikely to apply....

housebuyer143

JLRetired said:

housebuyer143 said:

Do they have power of attorney for financial affairs for her? Might be they can buy the flat in her name and avoid the additional stamp duty?

Her siblings have power of attorney but the money to buy the flat would come from the sale of the current family home, for which she is not a co-owner.

That's not a problem though if they are buying it in cash as the money can just be given to her I imagine and the house put in her name.

JLRetired

housebuyer143 said:

JLRetired said:

housebuyer143 said:

Do they have power of attorney for financial affairs for her? Might be they can buy the flat in her name and avoid the additional stamp duty?

Her siblings have power of attorney but the money to buy the flat would come from the sale of the current family home, for which she is not a co-owner.

That's not a problem though if they are buying it in cash as the money can just be given to her I imagine and the house put in her name.

So the money would be a gift from the parents and subject to the 7 year rule for IHT purposes?

dimbo61

So the daughter with mild learning disability ends up with a " flat " in her name.
What happens if the daughter has to go into 24/7 nursing home care ? Will the council sell her flat to pay for her care !
Could it be out in trust so she can live there rent free but the property can't be considered for her later life care needs.
At the moment the daughter has No assets and would qualify for a number of benefits like housing benefit, pip, dla, etc
Please speak to Shelter, CAB and solicitors/accountants before investing a huge amount of money in something which may cause problems for the daughter.

elsien

I am surprised that someone with a mild learning difficulty, as opposed to learning disability, is dependent on family.
That aside, how old is the daughter? Because of the rules around the age of residents in some of these complexes. And that she might be better suited to living somewhere with younger people rather than all old folk, again depending on her age.

Have they considered if they have enough income for their own care should they need it, to avoid the deliberate deprivation of assets with regard to the local authority financial assessments. Which is entirely different from the tax questions but do get conflated  sometimes.

Sarahspangles

JLRetired said:

housebuyer143 said:

JLRetired said:

housebuyer143 said:

Do they have power of attorney for financial affairs for her? Might be they can buy the flat in her name and avoid the additional stamp duty?

Her siblings have power of attorney but the money to buy the flat would come from the sale of the current family home, for which she is not a co-owner.

That's not a problem though if they are buying it in cash as the money can just be given to her I imagine and the house put in her name.

So the money would be a gift from the parents and subject to the 7 year rule for IHT purposes?

I think so hence the suggestion to ask subsidiary questions on the Probate board.

It sounds like a very practical and caring thing they want to do and hopefully it can be made to work within IHT and potentially social care cost rules.