buying parents property

diann_2

Hi , please could anyone offer general advice. My husband , his brother and sister gave their parents money to buy their council house about 4 years ago. Last year their mum went to a solicitors and put the house in their name. They live in the house rent free but pay for maintenance. We have done this naively and now are wondering what will happen when they pass away. Will we have a big bill or should we have done things differently. We thought it would be an investment for our children. Thanks in anticipation for any advice.

MarkyMarkD

If they have just got an ex-council house and not many other assets, probably no problem.

Robert_Sterling_3

Since she remains in the house at no cost you are right to be concerned.
If the house value + the value of any other of her assets total signifcantly more than £263,000 you could have to pay Inheritance tax.
If you were to say what the house is now worth with vacant possession, roughly, and hopw old you parents are and other relevent facts I might say more.

sarahlouise210

this is a tricky one ??? - it appears on the surface that the house does not belong to the parents at all as they now have signed it over to the children who paid for it... however the house can still be considered an assett on death as it is a gift given before death that they still gained some benefit from (ie they live in it) the value of the house can also be added to any Inheritance tax calculation if it is considered as a gift given within 7 years of passing away it is impossible to say without knowing the parents income but you could assume that they did not have the money themselves as the children paid for it for them (although this was an investment) even if this is the case the increase in property prices and the discount they will have received would more than cover any tax that was possibly due

diann_2

There is no big money involved. We bought the house for 15,000, paying 5,000 per child. The parents have no money themselves and are mid 60's and retired. Houses in the same street are fetching 110,000. It's quite a nice street and they do sell well.

lisyloo

There won't be any inheritance tax liability because the allowance is £263K (and it doesn't sound like they have loads of other assets tucked away).

Did you pay a fair market price at the time (doesn't sound like it).
If not then it could be construed as a gift by the local authorities (as you didn't pay a fair price for it) and they could potentially sell the house or put charges against the house (to be paid when it's sold) if either of them need long term care.

There is lots of information available about this subject on the age concern website, but basically they are not allowed to give their money away and then claim state benefits i.e. long term care. There is no time limit for this.

Robert_Sterling_3

We still do not know how old the parents are.

diann_2

dad 66, mum 64

sarahlouise210

The DSS will usually only contest the signing over of a property if it is deemed that is has been done solely to enable the original owner to claim state benefits.

diann_2

The parents don't claim benefits as they have a superann pension. The house was only really signed over because there are other siblings who did not want to contribute to the purchase and as the house was in the parents name we thought would have a claim to it.

lisyloo

The DSS will usually only contest the signing over of a property if it is deemed that is has been done solely to enable the original owner to claim state benefits.

And do you think they wouldn't deem this?
if so why?
(I agree that the parents age is relevant).

The house was only really signed over because there are other siblings who did not want to contribute to the purchase and as the house was in the parents name we thought would have a claim to it.

I am not questioning your reasons.
I am sure you didn't do it to claim benefits.
However you have to consider how a local authority aying £20K a year or more might view it.
You might be safe because your parents are young, but there are not guarantees as there are no time limits.
I have seen a case going back 18 years.