Advice on Buying second property

Weirdo109

I am in need of some important advice.

I am looking to buy a bungalow for my mum to move into from her current council accommodation.

The council property is a 3 bedroom house which is too much for her and the council have no low level accommodation available.

Last year my Nan passed away and left her about £230,000 which is current in savings in mine and my brother’s names.

She has seen a bungalow which is near where I live and thinks it will be ideal for her and wants out of the house.

Whilst I have no problem with my mum spending the money to make her happier I have told her that many problems can and will occur by her giving up the council property.

But she still wants to go ahead with the purchase regardless.
The property is a one bedroom bungalow in Laindon, Essex currently up for £194,000.

What I need to know is what it the best way of purchasing this property.
Also what would be a realistic price to go and offer as I feel this is a high price for the property and the volatile market at the moment?

Do I do it in my mum’s name which will cause problems if she has to go into a home?

Do I do it in mine and my brothers names which I assume we will both have to declare?

If we do what will this effect. i.e. tax, working tax credits.

Will I have to pay anything like capital gains tax?

I am really at a loss with this and do not want to go and purchase the property and then find I have to pay a large sum of Tax.

Not sure who would be a good person to go to for advice.

I would really appreciate some help on this as I have never done this before and am worried about the consequences.

tbs624

Weirdo109 wrote: »

Last year my Nan passed away and left her about £230,000 which is current in savings in mine and my brother’s names.
...........
Whilst I have no problem with my mum spending the money to make her happier I have told her that many problems can and will occur by her giving up the council property.
...........
Do I do it in my mum’s name which will cause problems if she has to go into a home?
..................
Do I do it in mine and my brothers names which I assume we will both have to declare?
.........
I would really appreciate some help on this as I have never done this before and am worried about the consequences.

Are you worried about your mother or are you worried about losing what you see as your inheritance? If the money was left to her, why is it in bank accounts held by you and your brother?

AFAIAA the Community Care Act S47 says that anyone requiring care has to be assessed by the local Social Services and, if that assessment confirms care is required, then a means test will be necessary, during which your mother would have to disclose *full details* of her assets. This includes property currently or previously owned, whether jointly, or as tenants in common plus all savings to determine who should pay for care/nursing home fees. Assistance is given if you have assets of less than £21,000 (I think) in England and Northern Ireland.(slightly different in Scotland & Wales)

However unfair you view it as, if your mother owns her home or has savings it is likely that she would be liable for the majority of her Long Term Care costs. My understanding is that a Local Authority has a right to check whether there has been a Deprivation of Assets, ie that her home or assets have not been gifted in an attempt to avoid Nursing Home Fees. They can seek to recover any assets disposed of in this manner.

Quite apart from all of that, if your mother wants to use what is, after all, *her* money to get a more suitable home for her final years, then she should do so. It would also free up a family-sized Council home for a family who don't have nearly a quarter of a million sitting in a bank account.

chappers

If she gifts you the money and lives for a further 7 years you will have inheritance tax issues , however if she doesn't then there is inheritance tax to pay depending on how long she survives, again depending on how long after she gifts you the money, she needs care, will depend upon how deprivation of assets is viewed, the downside of what you are doing is that her gifting you the money and then you buying a house for her to live in would in my opinion be a pretty clear cut case of intentional deprivation.
But as a way out of this you may (if she needs care) be able to remortgage either your own home or her home and buy her a care package negating the need to use the NHS.
I would try and keep as much of the capital avilable, as possible, for her future care.

If you already own your own home you may have a capital gains tax issue depending upon the price you eventually sell the house for.

Weirdo109

tbs624
I am worried about my mother more than anything.
I am not worried about inheritance as non of my family have ever had any money.
The only reason we have this sum now is due to two family berivements in the space of six months and the housing market at the time being strong.
My mum has never owned a property she has always been a council tenant.
When my nan passed we became joint executors of the will as due to my mum's medical condition she was unable to deal with the berievement, comprehend the solicitors or deal with the property.
Fundamentaly I have no problem with the purchase of the property.
However there are many other things that need to be taken into accout.
I'm sure if the situation happened to you and your family you would do your best to make the available funds go as far as possible and provide the best in the long term, rather that just saying here Mr Taxman have all this money for no good reason.

chappers
The money was not gifted to us, we became joint executors as stated above.
Not quite sure what your saying about the inheritance tax could you clarify it please.

SouthCoast

I was suprised by this:

The council property is a 3 bedroom house which is too much for her and the council have no low level accommodation available.

Should it read

no low level accommodation available today.

?