Selling/transferring ownership of grandparents house
Discussion
Hi all,
Looking for some advice or suggestions on how best to deal with my grandparents house now that they are both in a care home long term.
When they bought the house 20+ years ago, it was under tenants in common between both of my grandparents, and their two chidren, my mum and uncle, so 25% to each of the 4 parties. My grandparents living there, and my mum and uncle elsewhere in their own houses.
So now they are both in a care home, although the money is not needed yet, as they have been in there for nearly a year and will not be returning home we were looking to sell the house.
My uncle came up with the idea of buying the house instead, as its a bungalow and hes now retired, not getting any younger etc, its a much better place for him to live. Everyone is happy with this, and as he already owns his own house outright, as well as 25% stake in my grandparents house, he can easily afford to buy it with proceeds from his house sale and savings.
Now the question is how do we best do this? What are the tax implications for my grandparents and mum?
Furthermore, what are the options/benefits with regard to my mum keeping her name on the house, as my uncle has no other next of kin, long term he will probably want to leave it to my mum anyway? It would just seem a bit odd for him to buy out everyone, with my mum then receiving funds from her 25%, and then for her still be a tenant in common anyway? Would it make more sense for my uncle to buy everyone out for now, and then deal with his estate later? Although I know for certain things there are periods of time that things have to have been in someones name as to not attract inheritance tax etc...?
Any help or input is appreciated! It seems like there are multiple ways to go about things, but of course we want to be as tax efficient as possible and ensure things are dealt properly. Thank you.
Looking for some advice or suggestions on how best to deal with my grandparents house now that they are both in a care home long term.
When they bought the house 20+ years ago, it was under tenants in common between both of my grandparents, and their two chidren, my mum and uncle, so 25% to each of the 4 parties. My grandparents living there, and my mum and uncle elsewhere in their own houses.
So now they are both in a care home, although the money is not needed yet, as they have been in there for nearly a year and will not be returning home we were looking to sell the house.
My uncle came up with the idea of buying the house instead, as its a bungalow and hes now retired, not getting any younger etc, its a much better place for him to live. Everyone is happy with this, and as he already owns his own house outright, as well as 25% stake in my grandparents house, he can easily afford to buy it with proceeds from his house sale and savings.
Now the question is how do we best do this? What are the tax implications for my grandparents and mum?
Furthermore, what are the options/benefits with regard to my mum keeping her name on the house, as my uncle has no other next of kin, long term he will probably want to leave it to my mum anyway? It would just seem a bit odd for him to buy out everyone, with my mum then receiving funds from her 25%, and then for her still be a tenant in common anyway? Would it make more sense for my uncle to buy everyone out for now, and then deal with his estate later? Although I know for certain things there are periods of time that things have to have been in someones name as to not attract inheritance tax etc...?
Any help or input is appreciated! It seems like there are multiple ways to go about things, but of course we want to be as tax efficient as possible and ensure things are dealt properly. Thank you.
Edited by Daaaveee on Tuesday 20th December 14:23
It was your grandparents' main residence - so when it is sold or transferred, they will not have to pay any Capital Gains Tax as the property is/was their main residence.
Your mother and uncle own a 1/4 share in the property each. The property is not (I asume) their main residence so the proceeds on disposal each of them receives - if the property is sold - will be subject to Capital Gains Tax.
Your mother and uncle own a 1/4 share in the property each. The property is not (I asume) their main residence so the proceeds on disposal each of them receives - if the property is sold - will be subject to Capital Gains Tax.
Eric Mc said:
It was your grandparents' main residence - so when it is sold or transferred, they will not have to pay any Capital Gains Tax as the property is/was their main residence.
Your mother and uncle own a 1/4 share in the property each. The property is not (I asume) their main residence so the proceeds on disposal each of them receives - if the property is sold - will be subject to Capital Gains Tax.
Thanks Eric, this is what our current understanding is. Uncle will pay the value of the 75% to the others, and 20% CGT will be due on the 25% to my mum. Then separate discussions can be had later down the line on how uncle wants to deal with his assets for the future.Your mother and uncle own a 1/4 share in the property each. The property is not (I asume) their main residence so the proceeds on disposal each of them receives - if the property is sold - will be subject to Capital Gains Tax.
Daaaveee said:
Eric Mc said:
It was your grandparents' main residence - so when it is sold or transferred, they will not have to pay any Capital Gains Tax as the property is/was their main residence.
Your mother and uncle own a 1/4 share in the property each. The property is not (I asume) their main residence so the proceeds on disposal each of them receives - if the property is sold - will be subject to Capital Gains Tax.
Thanks Eric, this is what our current understanding is. Uncle will pay the value of the 75% to the others, and 20% CGT will be due on the 25% to my mum. Then separate discussions can be had later down the line on how uncle wants to deal with his assets for the future.Your mother and uncle own a 1/4 share in the property each. The property is not (I asume) their main residence so the proceeds on disposal each of them receives - if the property is sold - will be subject to Capital Gains Tax.
If they are in a state run care home, won't all their dosh be used up paying for their care? I think they will be able to keep X amount but the rest will be used to pay for care until it runs out I think.
More here
https://www.ageuk.org.uk/information-advice/care/p...
More here
https://www.ageuk.org.uk/information-advice/care/p...
oblio said:
If they are in a state run care home, won't all their dosh be used up paying for their care? I think they will be able to keep X amount but the rest will be used to pay for care until it runs out I think.
More here
https://www.ageuk.org.uk/information-advice/care/p...
Yes that is the case. They are able to pay the bills for a while yet without selling the house, but the time may come when it needs to be and it would be easier if the money was accessible rather than tied up in the house.More here
https://www.ageuk.org.uk/information-advice/care/p...
Daaaveee said:
Oceanrower said:
I’m pretty certain this is illegal. Or, at least, morally dubious…
In what way? No-one is trying to take anything off anyone, just trying to understand how it's supposed to work, and what tax is due.Thanks for the replies so far, looks a specialist in the area is required.
This is not correct. The only relief could have been indexation but this was abolished long ago. If sold rapidly then there is the 12k odd cgt allowance but that gets smaller from April.
The gain will be absolute ( the property is sold ) so her liability is the purchase price less the sale price less costs ( legal / stamp / refurbishment contributions etc ).
There are reliefs on death for part properties ( selling 25% of a property is tricky ) but this does not apply as the gain is absolute as above.
The gain will be absolute ( the property is sold ) so her liability is the purchase price less the sale price less costs ( legal / stamp / refurbishment contributions etc ).
There are reliefs on death for part properties ( selling 25% of a property is tricky ) but this does not apply as the gain is absolute as above.
This could get complicated (or not) and you will need legal advice to ensure it is not seen as misappropriation of funds to avoid care home fees.
The tenants in common done a long time ago when they were both fit and well may mean it’s a harder case for the local authority to argue it was done to avoid care home fees. In my experience it is usually the couple in the house that take out tenants in common. To include other family members could be seen as misappropriation of funds.
It’s a complex area and you need legal advice from someone specialising in this field.
The tenants in common done a long time ago when they were both fit and well may mean it’s a harder case for the local authority to argue it was done to avoid care home fees. In my experience it is usually the couple in the house that take out tenants in common. To include other family members could be seen as misappropriation of funds.
It’s a complex area and you need legal advice from someone specialising in this field.
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