Mum gives me her house, how to deal with care costs later on
Discussion
desolate said:
Yes I can see that. Which makes her transfer an even worse bargain for her.
Why? It simply accelerates a process that is going to happen anyway.Property will take a dive again in the future. I certainly don't want my parents taking that hit when I am better placed to do so
walm said:
Absolutely.
So (to stick with my IHT analogy) isn't it exactly the same as someone asking:
"My mum wants to gift me £1m, how long does she have to live for me to avoid IHT?"
Answer: 7 years.
The intention is to AVOID tax (or in this case avoid care home claw-backs).
Isn't it the same thing?
Genuine question! It just seems the same to me.
I can see your point but under the IHT rules the mother couldn't live in the house wihout paying market rent and the sons paying tax on the income.So (to stick with my IHT analogy) isn't it exactly the same as someone asking:
"My mum wants to gift me £1m, how long does she have to live for me to avoid IHT?"
Answer: 7 years.
The intention is to AVOID tax (or in this case avoid care home claw-backs).
Isn't it the same thing?
Genuine question! It just seems the same to me.
Also the IHT rules are pretty clearly drafted - this situation is different. IF the OP and the mother answer the question honestly (Why did you transfer the house?) they will fall at the first hurdle.
TBH I couldn't care less about the moral argument about taxes/care fees, but this is just a bad idea.
rsbmw said:
In tax cases, yes, but the ability for the LA to overturn sales etc and reclaim money in these cases (if they can prove it) points to the intention of evasion. It not necessarily being illegal doesn't change that.
You need to stop using the word 'evasion'. It's undermining your other points.Jockman said:
You need to stop using the word 'evasion'. It's undermining your other points.
I disagree here, evasion and avoidance are clearly defined when dealing with tax only. We're using the same terms to discuss something else entirely, and the intention dictates which to use. Evasion - intention to not pay what you "should", Avoidance - intention to reduce your liability to the minimum required.Jockman said:
Why? It simply accelerates a process that is going to happen anyway.
Property will take a dive again in the future. I certainly don't want my parents taking that hit when I am better placed to do so
Divorce of children. Death of child(ren). Financial problems for any of the parties. Change of plan in that she meets a toyboy and wants to sell the house and buy a flat in Spain. Or just wants to sell up and move. Property will take a dive again in the future. I certainly don't want my parents taking that hit when I am better placed to do so
A whole host of reasons.
desolate said:
Divorce of children. Death of child(ren). Financial problems for any of the parties. Change of plan in that she meets a toyboy and wants to sell the house and buy a flat in Spain. Or just wants to sell up and move.
A whole host of reasons.
Yup. Ozzie's already pointed out the risks. As I've said, eyes wide open.A whole host of reasons.
OP's best getting on with it as a transfer. Let's get away from this 'evasion' scaremongery. Thousands of people do transfers to relatives and then pop their clogs or need care 5 years later. It's nothing to get excited about.
The prospect of an estate being dwindled to bugger all under third party control with f
k all accountability is far worse IMHO.
The prospect of an estate being dwindled to bugger all under third party control with f
k all accountability is far worse IMHO.Jockman said:
DSLiverpool said:
Its too late to gamble she wont after the Vanquish is parked on the drive though.
How will he afford that? He's not selling the house.ie collateral, security, equity sale etc or promise not to sell it and accidentally instruct an estate agent (whoops).
Money changes everything unfortunately.
Jockman said:
Sheepshanks said:
Jockman said:
In reality many families take the council contribution and add their own contribution to it.
When you say "many" - is there any way of quantifying that, even in percentage terms?It strikes me that very few families eligible for the council to pick up the tab, would be the sort of families able to afford the uplift from the council rates to that of a good quality private home.
The council contribution (IIRC in the £500/wk range) to the typical decent private home cost (more like a £1000/wk) for, potentially, many years. My Mum has been in a couple of homes for coming up to 10yrs now.
Sarnie said:
desolate said:
Have I missed the point?
Where will mum live if she gives her house to her kids?
In the house?Where will mum live if she gives her house to her kids?
Jockman said:
rsbmw said:
God forbid anyone would have to pay for themselves from their own assets/money, rather than hiding it and having Joe Taxpayer foot the bill.
The tax payer pays for the majority anyway.The system penalises those that have saved all their life and benefits those that have not, or indeed not been in a position to save.In reality many families take the council contribution and add their own contribution to it.
i think you may be confusing how care costs are made up ( especially if someone's needs are such that they require a placemwnt in a care home with Nursing )
the OPs plan looks very much like deliberate deprivation of assets of his mother (especially if she then livesin the property 'rent free' ) and as others have pointed out opens up a variety fo possibilities when the house may be lost ...
Jockman said:
Sheepshanks said:
Jockman said:
In reality many families take the council contribution and add their own contribution to it.
When you say "many" - is there any way of quantifying that, even in percentage terms?It strikes me that very few families eligible for the council to pick up the tab, would be the sort of families able to afford the uplift from the council rates to that of a good quality private home.
The council contribution (IIRC in the £500/wk range) to the typical decent private home cost (more like a £1000/wk) for, potentially, many years. My Mum has been in a couple of homes for coming up to 10yrs now.
As for % I could not say. The people I know or deal with tend to be richer than their parents.
When I was running Sheltered Schemes (different kettle of fish) the amount of self-funders was in the region of 25% with the rest on state support.
If a property is "gifted" by a parent to an offspring but the parent reserves the right to live in the property, that is called a gift with reservation of title and will not be an effective gift in law.
Also, HMRC may insist that the new "owner" of the property pay Income Tax on the deemed market value of rent they would be getting on the property if let on the open market.
Also, HMRC may insist that the new "owner" of the property pay Income Tax on the deemed market value of rent they would be getting on the property if let on the open market.
walm said:
rfisher said:
OP and his brother would get hit for CGT on disposal of the property though - no?
If it has gone up in value from the time they were given it, yes.However, if their mother pays a peppercorn rent, then they can claim 18 months' relief - no?
(I feel the presence of the Eric).
Eric Mc said:
If a property is "gifted" by a parent to an offspring but the parent reserves the right to live in the property, that is called a gift with reservation of title and will not be an effective gift in law.
Also, HMRC may insist that the new "owner" of the property pay Income Tax on the deemed market value of rent they would be getting on the property if let on the open market.
both of which would provide the La with evidence to suggest it;s a deprivation of asset scenario ?Also, HMRC may insist that the new "owner" of the property pay Income Tax on the deemed market value of rent they would be getting on the property if let on the open market.
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