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    • Pippagirl84
    • By Pippagirl84 7th Aug 18, 11:28 AM
    • 5Posts
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    Pippagirl84
    Gift from parent to buy house
    • #1
    • 7th Aug 18, 11:28 AM
    Gift from parent to buy house 7th Aug 18 at 11:28 AM
    My mother in law is currently in a care home as she had a stroke earlier this year. She is paying approximately £45000 a year.
    We are currently selling her house, which should be sold for £825-£850k in which she has no mortgage.
    Her health has improved in the last 2 months & she wants to come to live with us, but our house is too small. Our house is also currently up for sale.
    My wife is an only child & her mother has suggested a proposition to us.
    She said why donít you sell your house to me, (worth £350k) and Iíll rent it out. Then she would give us the extra £200,000 to buy a house big enough for us all to live in.
    The only reason for buying the house would be to speed up the process in which she could live with us.
    We are not trying to avoid care home fees if she had to go back in the future, as she would still have about £250k left plus our house if it came to it.
    We also know the implications of looking after her.
    This has come as a big surprise and our heads are spinning with this. We would like some advice on tax & to see if this route is advisable.
Page 1
    • TBagpuss
    • By TBagpuss 7th Aug 18, 11:55 AM
    • 6,966 Posts
    • 9,183 Thanks
    TBagpuss
    • #2
    • 7th Aug 18, 11:55 AM
    • #2
    • 7th Aug 18, 11:55 AM
    Is your MIL in a position to be landlord? it would mean she had a lot of legal obligations, plus the need to manage the letting.

    If you are already in the process of selling her on home, then it's likely to be much simpler to sell both her and your home and buy a new one. If her house sells more quickly than yours, then she could lend you the £350,000 and you can repay her once your property sells.

    You and she would both need to get advice about structuring the ownership of the new property - including what would happen if any party decided they no longer wanted to live together, and have a formal declaration of trust drawn up.

    If your MIL went ahead and bought your house, then she would be liable for CGT of the property then increased in value before she sold it and will also have to pay tax on any rental income.

    Longer term, hr interest in the jointly owned house would be part of her estate, and this, and any gifts she has made in the 7 years prior to her death, will be included when calculating any inheritance tax payable by her estate when she passes.
    • Cakeguts
    • By Cakeguts 7th Aug 18, 12:00 PM
    • 5,321 Posts
    • 8,117 Thanks
    Cakeguts
    • #3
    • 7th Aug 18, 12:00 PM
    • #3
    • 7th Aug 18, 12:00 PM
    I think you need to consider where people get injured when they have strokes. Sometimes the way their brains work do not return to what would be considered normal thinking.


    Your mother in law is in a care home. How on earth does she think that she can become a landlord?


    Your house might make a very good rental but the chances are it won't. So you could finish up with a tenant from hell and a landlord who is currently in a care home. Does anything about this worry you?
    • martindow
    • By martindow 7th Aug 18, 12:03 PM
    • 7,874 Posts
    • 4,529 Thanks
    martindow
    • #4
    • 7th Aug 18, 12:03 PM
    • #4
    • 7th Aug 18, 12:03 PM
    We also know the implications of looking after her.
    Originally posted by Pippagirl84
    Are you sure? She appears to be better now but what happens if she deteriorates?


    From experience, caring for somebody for the last years of their life is committing to the unknown and can be an enormous thing to take on. If MiL needs someone there with her all the time it can be exhausting and is taken on with no idea of what will happen in the future. One or two people can certainly not provide 24 hour care if it comes to that.



    Most of us like the idea of caring for our family but it should not be entered into lightly.
    • xylophone
    • By xylophone 7th Aug 18, 12:10 PM
    • 27,673 Posts
    • 16,622 Thanks
    xylophone
    • #5
    • 7th Aug 18, 12:10 PM
    • #5
    • 7th Aug 18, 12:10 PM
    Does MIL's house have to be sold?

    Could she return to her own home (after any necessary adaptations) and you and your family move in with her?

    You might then consider either renting out or selling your current property?

    Otherwise, can MIL's house be sold, a property large enough and suitable for you all purchased with her money and you rent out/sell your own property?

    Obviously you would pay an appropriate share of all expenses relating to the jointly occupied property.
    • Grenage
    • By Grenage 7th Aug 18, 12:13 PM
    • 1,655 Posts
    • 1,581 Thanks
    Grenage
    • #6
    • 7th Aug 18, 12:13 PM
    • #6
    • 7th Aug 18, 12:13 PM
    We are not trying to avoid care home fees if she had to go back in the future, as she would still have about £250k left plus our house if it came to it.
    Originally posted by Pippagirl84

    £250k is only 5 years of care at the mentioned rate, and do you really want to be in a position where you have to sell your home to free up the gifted money?


    Would it perhaps not be wiser for her to downsize and use the funds to pay for private carer visits? If there's money at the end of it for inheritance - bonus; if not, at least you didn't lose your home or spend soul destroying years looking after a dying relative.
    • Pippagirl84
    • By Pippagirl84 7th Aug 18, 12:13 PM
    • 5 Posts
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    Pippagirl84
    • #7
    • 7th Aug 18, 12:13 PM
    • #7
    • 7th Aug 18, 12:13 PM
    Is your MIL in a position to be landlord? it would mean she had a lot of legal obligations, plus the need to manage the letting.

    If you are already in the process of selling her on home, then it's likely to be much simpler to sell both her and your home and buy a new one. If her house sells more quickly than yours, then she could lend you the £350,000 and you can repay her once your property sells.

    .
    Originally posted by TBagpuss
    Thank you for your reply. I tend to agree with her not buying our house and lending money instead, seems to make more sense. Just clarify your suggestion, it would be a loan of £350K and a gift of £200k?
    • Jane_B
    • By Jane_B 7th Aug 18, 12:13 PM
    • 108 Posts
    • 37 Thanks
    Jane_B
    • #8
    • 7th Aug 18, 12:13 PM
    • #8
    • 7th Aug 18, 12:13 PM
    Why would she be wanting to rent your home out, after buying it? It makes no sense, and to be honest in the condition she is in, becoming a landlord might not be the best idea.

    Why not just sell both homes, if hers sells faster then she can just gift you the full amount, then you repay the £350k once yours sells.
    • Pippagirl84
    • By Pippagirl84 7th Aug 18, 12:15 PM
    • 5 Posts
    • 0 Thanks
    Pippagirl84
    • #9
    • 7th Aug 18, 12:15 PM
    • #9
    • 7th Aug 18, 12:15 PM
    I think you need to consider where people get injured when they have strokes. Sometimes the way their brains work do not return to what would be considered normal thinking.


    Your mother in law is in a care home. How on earth does she think that she can become a landlord?


    Your house might make a very good rental but the chances are it won't. So you could finish up with a tenant from hell and a landlord who is currently in a care home. Does anything about this worry you?
    Originally posted by Cakeguts
    The situation would not be ideal as we would become landlords at my MIL is not well to cope with this.
    • Pippagirl84
    • By Pippagirl84 7th Aug 18, 12:18 PM
    • 5 Posts
    • 0 Thanks
    Pippagirl84
    Are you sure? She appears to be better now but what happens if she deteriorates?


    From experience, caring for somebody for the last years of their life is committing to the unknown and can be an enormous thing to take on. If MiL needs someone there with her all the time it can be exhausting and is taken on with no idea of what will happen in the future. One or two people can certainly not provide 24 hour care if it comes to that.

    Most of us like the idea of caring for our family but it should not be entered into lightly.
    Originally posted by martindow
    I appreciate your concerns and this decision will not be taken lightly.
    • Pippagirl84
    • By Pippagirl84 7th Aug 18, 12:21 PM
    • 5 Posts
    • 0 Thanks
    Pippagirl84
    Does MIL's house have to be sold?

    Could she return to her own home (after any necessary adaptations) and you and your family move in with her?

    You might then consider either renting out or selling your current property?

    Otherwise, can MIL's house be sold, a property large enough and suitable for you all purchased with her money and you rent out/sell your own property?

    Obviously you would pay an appropriate share of all expenses relating to the jointly occupied property.
    Originally posted by xylophone
    Her house is 20 miles away from where we currently live. She needs to sell the house as her account has now gone below the £23k mark and we are currently applying for deferred payment.
    • xylophone
    • By xylophone 7th Aug 18, 3:12 PM
    • 27,673 Posts
    • 16,622 Thanks
    xylophone
    Do you have Power of Attorney for your MIL?

    You speak of her having cash to return to a care home at need but you do not know when this may be or how long she will need care or what rates may be at that time.

    I am acquainted with someone now in a nursing home - she has been in care (originally in a residential home costing around £46,000 a year) for almost five years and is in her 97th year.

    Her fees (even after the nursing care component is taken into account) are over £60,000 a year. The high rate Attendance Allowance (approx £4450) mitigates this a little.

    In that time she has gone from a relative independence ( despite heart problems mobile with sticks/fully mentally capable/a little hard of hearing) to just about able to stand so needing a wheelchair, almost total deafness, double incontinence and now dementia.

    Think very carefully about your MiL's request and about mixing her financial affairs with your own.

    It would possibly be better to finance your own house move as you previously planned and move your MiL to the best available care home close to where you will be living?

    It could be a very good idea to take expert financial advice from a qualified IFA.

    https://societyoflaterlifeadvisers.co.uk/
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