'Mansion tax' - what if you just can't pay it?

[shellinthesea]

My elderly mum lives in a London house worth about 2million. She's been there for over 50 years, and is physically and mentally fragile. There is no way she would EVER want to move, the house and her neighbours are her whole world. She has no spare money - at all. (Neither do I, before anyone suggests this!) How is she supposed to manage this? It's not exactly her fault that the value of the property increased so much since my parents bought it all that time ago.

I also have a friend, also in London. Both parents sadly died in an accident about 15 years ago, and she used her inheritance to buy a family home which has also increased massively in value. It's probably also worth over 2 million now! She's a single mum on a lower income with 3 kids who very happy at their local school and within their community - what's she supposed to do?

It's just not as simple as 'you live in a high-value house, you can obviously afford to pay several grand a year' as RR seems to think. And for anyone who is about to say 'oh tiny violin, their houses are worth two million' - both of these situations are complicated and quite sad in many ways. Neither my mum nor my friend can simply just sell up and move...anyone have any thoughts on this?

Nonsense. If she needed care she’d have to move to a care home wouldn’t she? It’s such rubbish that someone is apparently so attached to their home that they couldn’t bear to leave it. Just no. OP can do the admin and get an LPA for the mum (which she should get anyway) so that she can sign stuff for her. Pay a moving firm to pack everything up, take the mum to a hotel for a couple of days while the move happens, get all furniture sorted at the new place and bingo, she moves in. When you have 2 million you can make the moving process easy. Put any excess furniture and belongings in storage.

I know. That was my original point with the pp. And why are you keen to penalise people with houses rather than rolexes (for example).

Im not sure what argument you are trying to make. As usual you are being a little cryptic.

Your mother’s situation isn’t unique, there will be many Londoners in the same position unfortunately. People just begrudge Londoners and believe they must all be loaded simply for being humans who exist in London.

But she IS loaded. She owns a 2 million pound home.

How is that a shitty flat? It's much bigger than my house and it's in zone 1! That's a large, fairly nice flat in a very central location. No shit it's expensive.

Because housing is not affordable now.

Sorry, can you explain how I am entitled for suggesting someone in a £2m house utilises equity release to fund their lifestyle?

? You realise she doesn’t actually have that money? She has to die in order for her family to receive some of it. If you read OP’s posts, it sounds like a move will essentially lead to mother’s decline and death, so that’s far from ideal isn’t it. Or is it ideal in your eyes, as then someone else can buy her £2m house?

Oh dear and I thought I was one of the least cryptic posters on MN. Nobody else seems to have trouble understanding me.

You’re completely missing the point. I really can’t make it any clearer.

A family member is currently buying a luxury 3 bed/3 bathroom flat in SE1 at the moment. For £1m.

There are loads of stunning 2 bed/2bath properties on the market in zone 1 for 850k-1.1m, many at the higher end with communal terraces/gardens, shared gardens, parking, concierge services, lifts and beautifully maintained within walking distance of gardens, buck palace/westminster, the parks and community centres/churches/mosques.

Sorry, but a £2m house is not a modest property.

Again, this is what equity release is for. She doesn’t have to die to access the cash, she just has to liquidate some of the value.

But that would impact everyone who inherited and not just those who own a 2million pound property.

That “shitty flat” is in Mayfair!

😆

Well...... you're going to get a lottery win of an inheritance. The hvct can be deferred and you pay it from the estate. It's unearned income so you'll be happy to part with a maximum of £25k, won't you?

Someone like that wouldn’t necessarily need a care home, they just wouldn’t have the energy for a move. And as I said, not everyone by any means has relatives with the time and inclination to do it all for them. Deferring will still be the best option for such people.

The vast majority of Londoners don’t live in a mortgage free 2m house that they paid a lot less for…

I expect OP would help out to preserve her inheritance.

You can be cryptic in that you often pick up on an obscure point and then run with it, sometimes (I'm assuming) as a distraction from the main argument being discussed at any given time. Its a useful tactic sometimes. I can see that.

Do explain your argument though if you would be so.kind. I am pretty clued up about the technicalities of IHT so hope to understand your argument (if you make it clearly).

I'm very happy for you that you live in a £2+ million house. Clearly I cannot possibly have been referring to you if you own it, so I don't know what the point of the snarky comment is.

And that's another point really. This isn't about taxing wealth, because most people who live in £2m houses won't own them, they'll have a bloody great mortgage. So in fact we're just taxing the appearance of wealth, while someone down the road with a £1m house they fully own probably has a lot more actual wealth.

Releasing equity means, effectively, selling part of your house to a finance company. I'm late 60s and mortgage free (in a £500k house, so not personally affected or ever will be) and it would screw my brain to not own the roof over my own head again and have complete control over what I do with it, after having worked so hard to get here. I also wouldn't want the stress of dealing with a financial institution over this.

The state needs to wait and get it after she's died. There is a consultation period which I think (hope) will come to this conclusion.

Sorry this should say 3 bed/2 bath. Didn’t mean to overstate the property size!

Its nit a choice for the kids though is it? Any more than growing old. Kids are people too!

You realise she doesn’t actually have that money

She has an asset, why is there a narrative that an asset is meaningless?

You're being disingenuous. An equity release wouldn't affect your Mums living situation, only your inheritance.

This isn't about taxing wealth, because most people who live in £2m houses won't own them, they'll have a bloody great mortgage

@Imdunfer how do you know that?