Mum wants to move properties in my name

[SassyPants87]

Apologies as I’m not very clued up when it comes to financial matters but was hoping to get some advice. My mum is 65 and owns a few rental properties that she wants to transfer into my ownership. Now these properties are essentially what will be her pension money as she never had an official pension before.

is there anyway that the properties can be in my name and the rent from these houses go into an account that she can also have access to? It’s her money so I want to make sure she can still get what she needs is this allowed/a regular thing? Thanks in advance

You need legal and tax advice - not straightforward as capital gains tax will apply, potentially deprivation of assets if care is needed in the future and you will need to pay income tax.

Sounds to me like she's trying to get rid of capital/assets to avoid having to potentially pay towards any care she may need in retirement. Look up deprivation of assets.

I expect it will be complicated due to deprivation of assets, capital gains, and possibly inheritance tax. Best to seek legal advice to keep it all above board.

You could maybe have a joint account with your mum that the rent is paid into, and she can then withdraw from it, but be careful if either of you has any means tested benefits as this could complicate the claim.

Only 1 in 5 needs a care home so it is probably unlikely later it would be found she had deliberately given assets away. The starting point is it ie perfectly lawfl to give assets to children. Indeed it is very wise as if you survive 7 years you lawfully avoid inheritance tax.

However if she has a benefit from those assets eg still living in a home given away she would have to pay you market rent which would be taxable in your hands. Also if she kept some of the rent or you gave it to her she is keeping a benefit from the properties and might even be a beneficiary of some kind of unwritten trust so you should get legal advice on it.

If she simply gave them to you outright and did not need or use the income then that is perfectly lawful although it will mean when you buy somewhere you might have extra 3% stamp duty to pay as you will have multiple properties (and capital gains tax on any gains might be due at some stage too as someone else mentioned).
It may be possible to put the assets into a limited company of which you are both shareholders and both receive dividends but there is an annual tax ATED on some properties in companies.

In a word, no. She presumably wants to gift the assets to reduce her estate for IHT, which is perfectly normal to do. But if she is still able to benefit from the properties (by taking the income) it will be a Gift With Reservation of Interest and will only be classed as a gift once she stops taking the income.

Plus she will be liable to CGT on the gifts, even though no money changes hands.

No stamp duty on gifts so fine there.

Perhaps it might be worth talking to a solicitor, and also an accountant, particularly with regard to tax implications for both of you, and also the potential possibility that it might be viewed as deliberate deprivation of assets should she need funded care in the future.

One possibility might be to transfer all the properties into a Ltd Company that you both hold shares in, so the company owns them and collects the rental income, and that she can pay herself dividends out of the profits.

Also worth thinking about what it does to your finances. My in-laws wanted to transfer their house to dh until I pointed out that should we separate their home would be a joint asset for us to split. Or if dh died before them it would be mine. I'm not familiar with the benefits system but I guess they would expect me to sell that house to provide for my dc

Yes good points. I have given money to each of my children for their housing and will survive 7 years, will probably survive 27 years! and am not likely to need a care home either ever or not for 20 years + but that is outright gift with no reservation of benefit.

When my mother died my father's solicitor helped my father put the house in joint names with us children at that point as our father wanted to give us some of our mother's money at that point (and the IHT rules were different then also - rules change all the time - hence why it is a good idea to get up to date advice from a solicitor). Also every family differs. Eg some families do not give inheritance to children with disabilities and a complex package of state benefits because the might lose the benefits for a eya ror two until the money is used up and be back to square one. Others as pointed out above are worried about a divorcing spouse getting their hands on it. I took the view I would take the latter risk.

You need to speak to a lawyer and an accountant together.

https://portolio.co.uk/blog/buy-to-let-limited-company/

have a read of this in its entirety, the section on IHT might be of interest to your mother

Thank you all so much some very helpful advice here and food for thought. We will definitely consult with accountant and solicitor to get the latest guidance and see what the recommendation should be

You will be the landlord of multiple properties. You will be liable for insuring the properties (policy can't be kept on by her), for gas and elec safety, etc etc.
Make sure you know your responsibilities in law, don't rely on the agent (eg. insist on seeing the section 48 notice they send when they transfer to you and register at land registry, for example).

Other people are correct - this will affect your tax bill (you might have to do self assessment each year if you don't already, as this will be taxable income).
It will certainly affect things like your declared income for university-aged children, if this is a thing.

It will possibly benefit her more than you.

Being a landlord is not easy ! Even if you use an agency

Do you want to become a landlord ?
You will be doing all the work & she would be expecting some of the money ?

You will need to complete a self assessment tax form each year to HMRC

It might be better if your DM sold some or all of the properties & invested her money into a pension or ISA s or something else instead.

https://www.gov.uk/renting-out-a-property

Do you already own a home in your name? If not then this would mean you would no longer be a first time buyer and eligible for any schemes or stamp duty reductions.

If she’s gifted the properties to you, then any income from letting them out is no longer her money. It’s yours, and there are limits to how much you can give away per year

You need proper legal and financial advice, and your DMum needs to understand that when she gives something away if is permanently transferred, no longer hers and she cannot have any of the things (such as use of the property, or income from someone else using the property) without the tax man being very interested.

They’re pretty hot on following up transfers which may not be genuine.

Also. your DMum needs to survive 7 years for the gift to fall out of IHT liability.

As they are second properties, she will need to pay CHT (and may be billed according to market value, not a substantially lower price of outright gift - you need individual advice on parameters for this)

And that’s on the assumption that the amount she wants to give away (whether to you or the local cats home) does not form substantial enough a proportion of her overall wealth that it could be classed as deprivation of assets

TL:DR - get individual advice - this is thorny and getting it wrong will be very expensive