sell my home to pensioner/retired parents

They will pay stamp duty on any price they pay you and if they pay you more than the open market value for a share the excess will count as a gift for IHT.


So if your house value is £600k and they pay £500k for 2/3rd, that's a £50k gift.

Possible pitfalls:

- Care home fees. Means test property exception fails if both/the survivor requires residential care whilst you are under age 60.
- Care home fees - possible deprivation of assets if they gift you £100k and then require care.
- Potential for IHT if they gift you £100k.
- They could look at equity release or a retirement mortgage. Neither of which sound like a great option if the aim is to reduce your mortgage. They would cost more than your standard mortgage and would require repayment of their current £30k loan.
- Your income may affect their entitlement to some benefits/grants if you share a home.

Generally, it's better if elderly parents' capital is retained for their own use in their lifetime. They may need to finance residential care and self-funders have much better choice and quality of care home. They may also wish to release equity from their home for their own use and gifting you a substantial amount would limit their options. Encumbering them with a big mortgage (lifetime or otherwise) at their age has plenty of downside.

xylophone wrote: »

If they repaid his mortgage against a legal agreement to register ownership of his house as tenants-in-common in the correct proportions (ie reflecting the £225,000 they had used to pay off his mortgage) they wouldn't have made him a gift - they would have bought into the house and would have an interest in the property?

There would also be a Declaration of Trust.

If one or both parents required care then presumably the LA could register a charge against the parental share of the property?

There could also be the balance of the money received from the sale of their own property (£200,000 +) which they could save/invest for any future care needs - presumably they also have private/state pensions to set towards the cost of care?

I think OP is suggesting (Option 1) that parents pay the full £400k to buy 2/3rds of his/her home so that the £225k mortgage can be repaid, and with £175k left for OP's pocket. After settling their own mortgage, OP's parents would be left with approx. £20-70k.

If all three owned the property, if a parent needed residential care, the house value would only be disregarded if:
a) The other parent was still living in the property.
b) A close relative (including a child) was living there, and it was their primary residence, and they were under 18, over 60, or disabled.

The danger, therefore, is that the survivor of OP's parents will require residential care when OP is under age 60. If that happens then it's probable that the house must be sold, or OP must buy-out the parent (at full market price).

The LA will only pay for care for self-funders for a max of 12 weeks when a property needs to be sold. They will then reclaim the funds (plus interest).

They will not take a charge on the property and pay the fees until the person dies.

It's a numbers game. LA's are so cash-strapped that they struggle to finance those who can't self-fund. They would face an acute cash flow problem in a nano-second if they were effectively providing indefinite loans to self-funders.

I take your point that the parent requiring care may have sufficient pension and/or other assets to self-fund without using the house equity. If so, then the house would be safe until those funds were exhausted. However, the fees will run to £45k-£60k per year and not many folk can sustain that for long without resorting to house equity.

I think that's roughly what OP has in mind.