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Pippagirl84
Posts: 5 Forumite
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 don’t you sell your house to me, (worth £350k) and I’ll 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.
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 don’t you sell your house to me, (worth £350k) and I’ll 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.
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Comments
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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.All posts are my personal opinion, not formal advice Always get proper, professional advice (particularly about anything legal!)0 -
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?0 -
Are you sure? She appears to be better now but what happens if she deteriorates?Pippagirl84 wrote: »We also know the implications of looking after her.
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.0 -
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.0 -
Pippagirl84 wrote: »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.
£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.0 -
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?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.
.0 -
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.0 -
The situation would not be ideal as we would become landlords at my MIL is not well to cope with this.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?0 -
I appreciate your concerns and this decision will not be taken lightly.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.0 -
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.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.0
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