Best way to pay for care home fees

Bookworm225

slambos said:

, I already have POA.

elsien said:

Do you have power-of-attorney for her, ? 

yes he does 

slambos

Apologies, yes, my comment that '"everyone would wish to keep the Mother's property', was unfair; I should have said I want to keep it as I would like to live in it one day. My mother also wants the same. But, I do also want her to get what she deserves in terms of care, etc. despite sounding potentially ruthless. 

The place needs rewiring and then fixing up/painting afterwards but then it will be good to rent. 

Unfortunately, it looks like rewiring is a capital expense so not tax deductible. 

It could be tight with the pension/rent to cover the care home fees so I'll need to top-up any deficit from my own sources. 

Grumpy_chap

slambos said:

Apologies, yes, my comment that '"everyone would wish to keep the Mother's property', was unfair; I should have said I want to keep it as I would like to live in it one day. My mother also wants the same. But, I do also want her to get what she deserves in terms of care, etc. despite sounding potentially ruthless. 

The place needs rewiring and then fixing up/painting afterwards but then it will be good to rent. 

Unfortunately, it looks like rewiring is a capital expense so not tax deductible. 

It could be tight with the pension/rent to cover the care home fees so I'll need to top-up any deficit from my own sources. 

Where do you live now?
Could you buy the property from her at open market value and then live in it?
Or rent the property from her now at open market rent and then live in it?
If you plan to live in the property "one day" then why not now?

Any work (expenses) preparing property for first rental will not be deductible against rental income.  
(Note that is not the cost of advertising and gas safe certs etc., but the cost of actual decorating, wiring etc.)
It is also likely, in this scenario, that any work to prepare the property for first rental will not be deductible against eventual CGT (though there will be no CGT if Mother still owns the property when she passes).

elsien

Grumpy_chap said:

slambos said:

Apologies, yes, my comment that '"everyone would wish to keep the Mother's property', was unfair; I should have said I want to keep it as I would like to live in it one day. My mother also wants the same. But, I do also want her to get what she deserves in terms of care, etc. despite sounding potentially ruthless. 

The place needs rewiring and then fixing up/painting afterwards but then it will be good to rent. 

Unfortunately, it looks like rewiring is a capital expense so not tax deductible. 

It could be tight with the pension/rent to cover the care home fees so I'll need to top-up any deficit from my own sources. 

Where do you live now?
Could you buy the property from her at open market value and then live in it?
Or rent the property from her now at open market rent and then live in it?
If you plan to live in the property "one day" then why not now?

Any work (expenses) preparing property for first rental will not be deductible against rental income.  
(Note that is not the cost of advertising and gas safe certs etc., but the cost of actual decorating, wiring etc.)
It is also likely, in this scenario, that any work to prepare the property for first rental will not be deductible against eventual CGT (though there will be no CGT if Mother still owns the property when she passes).

If the OP is effectively the landlord (via the LPA) as well as the tenant, is that even possible to do? They'd have to evict themselves if they ever stopped paying rent for any reason? 

Grumpy_chap

elsien said:

If the OP is effectively the landlord (via the LPA) as well as the tenant, is that even possible to do? They'd have to evict themselves if they ever stopped paying rent for any reason? 

Well, that might be a good point.  I don't know the answer.
However, there is seemingly no greater conflict of interest between the OP (representing the Mother under PoA) renting the house to the OP than there would be if the OP (representing the Mother under PoA) selling the house to the OP.
The situation cannot be unique and I would imagine there may very well be established procedures for managing either option under PoA in a way that satisfies scrutiny.

elsien

To the best of my knowledge, the LPA selling a house to themselves needs specific consent from the OPG.  The LPA on its own doesn't cover it. 
Just because I'm interested, I did a very quick google and found the suggestion that renting would need either a joint LPA to be the landlord or for there to be a trustee appointed to ensure that degree of separation. No source for that yet though.
In either case I think running it past the OPG and legal advice would need to happen. 

slambos

I live in rented accommodation currently with no funds to purchase the property and the market rental on her property is too high, so that's out.

The 'degree of separation' issue shouldn't arise I'm guessing if I as landlord rent it out to a third party? 

Keep_pedalling

I think renting it out to help fund care fees is probably not a great idea especially if you have zero experience of being a landlord. It sounds like you would have to spend  a considerable amount of money upfront to bring the property up to a standard that you would legally allow you to rent it out.

As the long term plan is to make this your home, when the time comes would you be in a position to buy the house (or a portion of it) and then you’d that money to pay for her care? 

elsien

slambos said:

I live in rented accommodation currently with no funds to purchase the property and the market rental on her property is too high, so that's out.

The 'degree of separation' issue shouldn't arise I'm guessing if I as landlord rent it out to a third party? 

Renting to a third party, if in her best interests having considered all the ways to safeguard her assets would be ok.  You need to consider what would happen if someone stopped paying rent for prolonged periods or trashed the place.
And read this for what you have to do prior to getting tenants in, and during a tenancy, to save yourself a world of pain. 
The complete guide to a landlord’s essential responsibilities | NRLA

slambos

UnfortunatelyKeep_pedalling said:

I think renting it out to help fund care fees is probably not a great idea especially if you have zero experience of being a landlord. It sounds like you would have to spend  a considerable amount of money upfront to bring the property up to a standard that you would legally allow you to rent it out.

As the long term plan is to make this your home, when the time comes would you be in a position to buy the house (or a portion of it) and then you’d that money to pay for her care? 

Unfortunately, I don't think I'll be in a position to do so.