Buying A Relatives House

[Ask-a-lot]

I am considering buying my elderly mother's home. I would live at the address and can provide company and care for my mother. Would I be able to buy the home for two thirds market value with the money it's sold for being given equally to my two siblings? This is obviously in lieu of any inheritance that may come our way in hopefully many years ahead. What are the cost, tax or other implications? Thank you

[davebro]

The only thing that springs to mind is if your mother necessarily went into a nursing home in the short to medium term. The sale of the house might be regarded by the LA as a device to avoid paying fees.

There may be other considerations.

[davebro]

and if you buy the house your mother is due the money so the *gifts* she makes of it to her other children would count as part of her estate for inheritance tax if she dies within 7 years. (current legislation I think)

[bhg481]

Depending on the value of the house there might be stamp duty requirements. I freely admit to having no expert knowledge on the subject but seem to remember that deliberately underpricing a property to avoid stamp duty is frowned upon.

[Ask-a-lot]

Thanks davebro. She is adamant she will never go into a care home and I know she won't. I live 200 miles away, but as I am now able to work from home in my career plus the children have flown the nest my partner and I can move to where we wish to live and be there for my mum. Instead of buying a house in the vicinity we can be in the family home. We would want it to be all legal and above board.

[Ask-a-lot]

bhg481, valid points but we are happy to pay whatever fees and keep it 'proper'. As no stamp duty on the home would be needed currently due to Covid and governmental incentives that wouldn't be a problem. By us being here and owning the home is just an idea. We could as easily live there at no cost but feel my siblings may feel we are taking advantage, though both have suggested it and like me being here for my mother. Old age can be horrible but also a blessing at the same time.

[bhg481]

Ask-a-lot - I wasn't implying you were deliberately trying to avoid stamp duty, I was simply warning you the HMRC might see it that way, so be prepared. It seems to me to be a perfectly sensible thing you are looking to do, particularly since your siblings are in agreement with you.

[davebro]

The only thing I would add is - apart from caring for your mother is it a place where you want lo live for the next x number of years?

You have to consider your own lives & be happy with the move.

[Peter Pedant]

Can you buy your auld mam's home?
yes
can you buy it under value - yes - The lawyers involved in the transaction may suddenly find 'duty' and jump up and down - but generally yes

tax involvement - it is hers so there is no CGT
If she dies within 7 y - (2025 say) IHT - yes that wd be involved as a disposal of an under valued asset. The question - whole asset counted - or just the difference ( real value minus sale price) and what about 2025 valuations?
dont know the answer to that one

OK the moolah - where does it go to? IF she goes into care, and the money is 'there' then it goes on care costs

If it has "gone" - to relatives, can the care people claw it back - yes under circs

the siblings ( where dey come from den?)
OK value 300k say - pay over 200k and give 100k to each grasping sibling - who of course are v pleased, as they get moolah now rather than jam tomorrow

well she will be assigning ( = giving ) it, so that it is part of her estate until 7 y are up for IHT purposes

and I think that just about covers all your bases

[Peter Pedant]

and should you do it?

well what happens if the asset value falls - - it wont property never does - (OK did 1992-7) but has risen for 100 y. It didnt even fall when the germans looked as tho they wd win in 1940.

well OK what if the asset rises - ? the two sibs come back for more - - MUCH more as it is "only fair" - - and so I wdnt. Luckily for you (as happened in my family) the two sibs makes such difficulties that it becomes imposs to transact anything besides sale - NOW!
( we lost the asset forced sale- I take pleasure in sending my sibs property sale notices on the 'lost' asset - one is a million and each house is going for £250 000). one sib lost ALL the share on stock market speculation)

good luck

[Peter Pedant]

// Ask-a-lot - I wasn't implying you were deliberately trying to avoid stamp duty,//

oh peanuts - - foo ! keep your eye on the BIG number

[woofgang]

You say your Mum will NEVER go and that's fine while she has capacity to decide and you are able to care for her. If she loses capacity and there is no other option then councils can do the deliberate deprivation thing.

[Ask-a-lot]

Thank you all. The answers....and questions....you have all provided have been a great help. We wish to move here and been looking for a time but now we actually have an opportunity that fits with work and our lives. Like most children I owe my mother so much for all she has done on my life and I want to pay back in kind. There for her in terms of company, take over all bills and stresses, any health care etc. I get precious time with my mother however long she has with us and can stop wasting time, and fees, searching for a home. Who knows what tomorrow may bring any of us so grab the opportunities today. Thank you all again.

[Ask-a-lot]

I know woofgang, and appreciate your thoughts. There are always 'what ifs' in life but we all have to balance on what is known today and what may happen tomorrow. These are all things we are building in to our decision, helped by all here.

[bednobs]

why dont you jjust move in with her without buying the house? then you get all the benefits you want but with no complications

[jennyjoan]

And also see if you and partner and your mother can live together.

Like the ole adage (Come and live with me and you will know me). Give that a go.