Dull question about what to do with mums house.....advice pleease!

[Ixel]

To put it as simply as possible...

1. At some point in the future, mum may need to go in a home.
2. If so, her house will be included when assessing if she has to pay... you have to pay for yourself if you have over a certain amount, until you've used it all up, then the gov steps in.
3. Obviously, I dont want to lose the house, as its ds's inheritance.

So, I have the money to pay off her mortgage. But if I transfer it to my name, will I be taxed or penalised in any way? My name isn't on dh's mortgage,so technically it wouldn't be a second home, if this makes a difference. Or would it be best in joint names?
Am planning a trip to citizen's advice, but mn's advice is much quicker and easier!!
I have a habit of asking questions that no-one answers, but someone out there must have been in a similar position!! If we choose the wrong solution, it could be very expensive!

How long in the future do you anticipate your mum going into a home? This is important as, if you feel it might not be that far away, whatever you do now might have no effect. If the authorities consider that the house was transferred into another name in order to avoid having to use the equity to pay for nursing fees, then they can seek an order requiring the property to be sold and the proceeds used accordingly.

If you feel it is quite some time away, then taking action now might well be prudent as your actions are less likely to be seen as avoiding this situation.

If it is transferred as a gift there maybe liability, this could be wrong I know it applies to cash, may be different for houses?
You may have to actually buy it to avoid it perhaps?
I am sure thre are things in place to prevent people from doing this, the govt would have it covered one way or another...

I think I saw somewhre that you have to have given away any assets over 7 years before to void them from being included. With luck, it could be this long before we need to make any changes to her living arrangements. But, if I'm paying off the mortgage and putting it in my name, then that IS buying it, so surely they couldn't do anything?Its up to her how much to sell it for surely, ie the loan value, not the market value. If she sold it to a stranger, they wouldn't be able to get it back etc...

Ixel, I think your mother would have had to dispose of her property/equity/assets a minimum of five years, might be seven. All her assets, pension etc will be investigated quite thoroughly when/if she has to move into a residential/nursing home. Also, depending on the home you might find yourself faced with fairly significant top up fees, even if your mother qualifies for accomodation on the basis of no assets.

Iknow when my Nan went in, they used her assets until £8000 was left, but after that it was paid for her. But, I also need to think of it from our point of view...will I be liable for anything by owning the property? If I end up shelling out money, I'd rather do it on the nursing home fees, not some stupid tax or other. Or do I only pay tax on rental profits? Because she'll be in the house rent free as long as she's there. Or should I charge her a nominal rent so its all official?

I think you need proper advice, I can get very confused, sorry. My sister and I owned my mother's house and she certainly didn't pay us any rent - never caused any problems. Sory, have to dash but back after 2pm and will try to gather my thoughts in a more helpful fashion. May be better if you ask certain questions and it may help me remember things. If you want to e-mail me to ask anything, please do.

Ok Sykes. When you get back...

1. Did you own another property too, ie was your mums house a second home?
2. Did she claim any gov help? Mums on lower level disability, 1 1/2 yrs away from pension. She really needs to stop her part time job due to ill health, but last time she applied for income support it was refused because she was available for work. So if I paid off the mortgage, that would help alot.She also gets alimony from my dad, but that all gets very complicated.
3. Did you officially buy your house from your mum or what? I'd really appreciate anything you can remember!

I think if it is not your principle place of residence, whether you have another mortgage or not, you could be liable for Capital Gains Tax at some point, should you do it up and resell, for example, or rent it out in the meantime. Also you'd have to have it transferred as a gift for 7 years to avoid it being included in the estate.

There is a free Times Guide to Inheritance Tax which came up on another thread a while back - call 0845 458 3609 and quote SJP2404 - which should clarify the liability of potential inheritance tax and ways in which to minimise it.

Any rental income you receive from the house will make you liable for capital gains tax. We own an apartment that is not our main residence and is a buy to let in joint names, which is more tax beneficial. As a couple the capital gains exemption amount is around £16,000 (can't remember exact amount but look on inland revenue site if you want to know) or as an individual it is just short of £8,000. There are ways around inheritance tax, setting up a trust (there are a few) is one of the ways. For more tax advice, you could look on www.money.msn.co.uk - look on tax basics for inheritance tax and the different types of trust available and on saving tax for info on capital gains - it's all in easy non-accountant english IYKWIM HTH

We sold my mother's old house and new house (with small mortgage) was bought by myself and my sister - ie, never in my mother's name. Yes I owned another house, my sister owned at least two but in the US. Not sure what you mean by government help??? She had the usual state pension when living in the house, but certainly didn't pay any rent to us/claim for any. No, my mother sold her old house - new house was always in my sister's and my names - capital from the sale of my mother's old house was used, in part, for the new house. Hope haven't confused you even more ......