Help please

Lipstick85
Lipstick85 Posts: 25 Forumite
in Housing benefit help
Hi I'm not sure if this has been posted in the correct place apologise if it has not. I am buying my parent home they are both unemployed and their mortgage ends next year. I am buying it at the amount left outstanding on their mortgage which is £26,000. The property is worth 85k and we have been advised by a financial advisor they should gift us the rest of the money if they were to do this would they have their unemployment benefits stopped?

Thanks

Comments

  • Valli
    Valli Posts: 24,773 Forumite
    Name Dropper Photogenic First Anniversary First Post
    They are at risk of deliberately depriving themselves of assets (google deprivation of assets). Not only are they at risk of losing benefits but (you don't say how old they are) if they were to need, say, residential care then they might run into problems later.

    You are opening a can of worms with this one; you may end up with a tax liability, too, on the 'gift'.

    You need proper, professional (ie paid for) advice here.
    Don't put it DOWN; put it AWAY
    "I would like more sisters, that the taking out of one, might not leave such stillness" Emily Dickinson
    :heart:Janice 1964-2016:heart:

    Thank you Honey Bear
  • Lipstick85
    Lipstick85 Posts: 25 Forumite
    Hi,

    They are in the 50s?i have seeked professional advise and they have advised there would be a tax liability if something 'happens' within the next 7 years. Would there benefits be stopped by gifting me the money? My mam is actually claiming sickness benefit and my dad is actively seeking work.
  • Valli
    Valli Posts: 24,773 Forumite
    Name Dropper Photogenic First Anniversary First Post
    Looks like the professional advice you have received is wholly focussed on the Inheritance Tax Liability.

    In summary then, they are hoping to give you all their money and expect to continue to claim benefits from the taxpayer to live on. If you buy their house where are they going to live?

    You are probably going to get flamed for this...
    Don't put it DOWN; put it AWAY
    "I would like more sisters, that the taking out of one, might not leave such stillness" Emily Dickinson
    :heart:Janice 1964-2016:heart:

    Thank you Honey Bear
  • Lipstick85
    Lipstick85 Posts: 25 Forumite
    They are going to remain in the property. Yes they will be receiving money until a job is found which will hopefully be next week as my father has an interview.
  • Valli
    Valli Posts: 24,773 Forumite
    Name Dropper Photogenic First Anniversary First Post
    edited 24 November 2012 at 3:13PM
    So, when you own the property, are they planning to pay you rent?


    There are a few issues here.

    One is the IHT which you seem fully aware of. There is deprivation of assets; there is the issue that they are giving you their money but continuing to claim support from the state. If they stay in the property and you don't live there there are further issues. It's not 'really' a gift/sale if they have to stay in the property, it is beginning to look like a very fishy transaction indeed.
    Don't put it DOWN; put it AWAY
    "I would like more sisters, that the taking out of one, might not leave such stillness" Emily Dickinson
    :heart:Janice 1964-2016:heart:

    Thank you Honey Bear
  • Lipstick85
    Lipstick85 Posts: 25 Forumite
    No we will not be charging rent. All I would like to know is if there money will be stopped by deed of gifting us the money?
  • Valli
    Valli Posts: 24,773 Forumite
    Name Dropper Photogenic First Anniversary First Post
    Technically they aren't gifting you the money but the house. But, in effect they are giving you £59K while claiming benefit. As they will no longer own the house the Benefits Agency is going to want to know where the £59K has gone to; they, not unreasonably, would expect your parents to be living on this. So there is a good chance their benefits will be stopped; once they transfer the property to you.

    Like I said, google deprivation of assets.

    Other option - wait until your dad gets a job, then you won't have all the same issues.
    Don't put it DOWN; put it AWAY
    "I would like more sisters, that the taking out of one, might not leave such stillness" Emily Dickinson
    :heart:Janice 1964-2016:heart:

    Thank you Honey Bear
  • Lipstick85
    Lipstick85 Posts: 25 Forumite
    We have tenants waiting to be in our property on friday so waiting is not really option. If they gifted us the house would circumstances be different?

    Thanks
  • Valli
    Valli Posts: 24,773 Forumite
    Name Dropper Photogenic First Anniversary First Post
    Not really. They have an asset. That asset is worth £59K. Them giving you a gift is all well and good BUT benefits are for people who need them - not people who can give away large amounts of capital and expect the Government, and the tax payer, to then provide the money they need to live on.

    And this, put as nicely as I can, is what you will get if you ask elsewhere on the forum - or even here, if it gets spotted. But it won't be worded as gently as I have worded it.
    Don't put it DOWN; put it AWAY
    "I would like more sisters, that the taking out of one, might not leave such stillness" Emily Dickinson
    :heart:Janice 1964-2016:heart:

    Thank you Honey Bear
  • Dunroamin
    Dunroamin Posts: 16,908 Forumite
    Just to emphasise my agreement with everything that Valli's posted. If your parents give you this asset it will affect their ability to claim any means tested benefits, both immediately and for some time in the future.
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