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Mother Selling Me Her UK house

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Did anyone have any experience with paying inheritance tax on an estate in the UK, when you are a Thai resident. 

 

My mother has just turned 80 and wanting to sell her house to me, to avoid the authorities taking it if she goes into a care home. 

 

I'm not sure yet, but think there's is a 7 year rule about legality of the sale of the house. 

 

Is there anything that I should know or do to prevent problems down the line? 

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  • BritManToo
    BritManToo

    Mom should stay in her house, her children should move in and care for her. They inherit, and the kids who didn't look after her should get nothing. If the kids want the government to care f

  • This is a problem for my wife and I.   We built a small house for wifes mum next door to us here but one day when my mum can no longer take care of herself I will have to go back to the UK t

  • Will B Good
    Will B Good

    If the sale is at the market price it is just a sale......if she gifts it to you and she dies within 7 years then you will be liable for tax as it might be considered income (I guess there might be a

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There's a 7 year rule, ideally she should have done it years ago, if she lasts another 7 years, no inheritance tax, applies to all gifts, it's tapered every year to 7.

 

Govt must be aware of people doing this prior to going into a home so they will take it into account

  • Popular Post

If the sale is at the market price it is just a sale......if she gifts it to you and she dies within 7 years then you will be liable for tax as it might be considered income (I guess there might be a sliding scale).

 

The local authority will still have access to her funds though....so when you pay her they will be eyeing her bank account anyway. I think come the crunch she can keep up to £23,000 as personal savings.

  • Popular Post

Hi Neeranam.

 

If she sells you the house and continues to live in it she should pay you the market rent for the property which you should declare as income in the UK and pay tax on.

 

 

One to keep in mind.

 

 

  • Author

Thanks all. My mother is not sick, and might live another 20 years, like her mother.

 

So I have to be aware if it is a gift or a sale(I'd rather not actually buy it).

Also, it will be shared between 3 kids. 

 

Would me being a Thai citizen(sister Australian) have any significance?

 

Could I not let my mother live in my house rent free?

Just kicking the ball around here but what would be the scenario if your mother sold the house at market price then downsized to say a 1 or 2 bedroomed apartment. This would leave some cash left over which could slowly be gifted over her remaining years avoiding tax on it. The smaller apartment could later be sold to you ( less cash involved ) and if she then rented it from you the rent would be less and therefore if classed as taxable income the amount of tax paid on the lower rental would be less.

Also a point to consider is that houses require maintenance and repairs which as my own elderly mother is finding out , can be expensive. In an apartment the building insurance or maintenance fee takes care of this.

  • Author
16 minutes ago, Denim said:

Just kicking the ball around here but what would be the scenario if your mother sold the house at market price then downsized to say a 1 or 2 bedroomed apartment. This would leave some cash left over which could slowly be gifted over her remaining years avoiding tax on it. The smaller apartment could later be sold to you ( less cash involved ) and if she then rented it from you the rent would be less and therefore if classed as taxable income the amount of tax paid on the lower rental would be less.

Also a point to consider is that houses require maintenance and repairs which as my own elderly mother is finding out , can be expensive. In an apartment the building insurance or maintenance fee takes care of this.

Good point, however my mother refuses to leave here 3-bedroomed house where she now lives alone. She loves the large garden and all the neigbours.

My siblings are working on her thought to move to a flat. 

1 minute ago, Neeranam said:

Good point, however my mother refuses to leave here 3-bedroomed house where she now lives alone. She loves the large garden and all the neigbours.

My siblings are working on her thought to move to a flat. 

Had an identical situation with my mother, albeit 9 or 10 years ago. Three bed family house, large garden and a life time of memories.

 

It really will be a heartbreaking for her to leave. We took about a year to convince my mother to move, not an easy thing to do. 

 

Unless she can afford home help, a gardener, a cleaner she just has to move eventually. Sad.

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16 minutes ago, Neeranam said:

Good point, however my mother refuses to leave here 3-bedroomed house where she now lives alone. She loves the large garden and all the neigbours.

My siblings are working on her thought to move to a flat. 

Mom should stay in her house, her children should move in and care for her.

They inherit, and the kids who didn't look after her should get nothing.

If the kids want the government to care for her, the government should get the house.

I don't have much time for people that discard their elderly parents.

  • Author
Just now, BritManToo said:

Mom should stay in her house, her children should move in and care for her.

They inherit, and the kids who didn't look after her should get nothing.

I don't have much time for people that discard their elderly parents.

I've offered to buy a larger house here and have her move in but it's too hot for her to play golf here! 

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39 minutes ago, Neeranam said:

too hot for her to play golf here! 

Well, she could always try her foot at dagraw and make a new circle of friends. Can't do anything about the heat though

 

 

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46 minutes ago, BritManToo said:

Mom should stay in her house, her children should move in and care for her.

They inherit, and the kids who didn't look after her should get nothing.

If the kids want the government to care for her, the government should get the house.

I don't have much time for people that discard their elderly parents.

This is a problem for my wife and I.

 

We built a small house for wifes mum next door to us here but one day when my mum can no longer take care of herself I will have to go back to the UK to care for her and my wife will have to remain here caring for her mum. I couldn't stand the thought of my mother going into a home after all she has done for me and countless others. Fortunately my mother and sister moved to the Isle of Wight several years ago and if you have to be stuck in the UK I can't think of anywhere nicer, especially as the weather is a lot milder there.

2 hours ago, Neeranam said:

Thanks all. My mother is not sick, and might live another 20 years, like her mother.

 

So I have to be aware if it is a gift or a sale(I'd rather not actually buy it).

Also, it will be shared between 3 kids. 

 

Would me being a Thai citizen(sister Australian) have any significance?

 

Could I not let my mother live in my house rent free?

Thats exactly what my mum has been doing for the last 11 years after she gifted me her apartment by purely transferring ownership to me.

My son has lived in my house in England during the nearly 10 years I have lived here.  

 

We looked into me gifting the house to him but the lawyer we contacted said I /we would have to pay 40 percent capital gains tax on the difference between the market value (£500,000 plus) and the price I paid for it (£42,000) many years ago.

 

A huge sum he has not got ...... and that I was certainly not going to pay to give him my house..

 

There is much doubt that this advice was correct.    A bank manager said that was rubbish. But it ended my interest in giving him my home.

 

Actually .... I have always thought that I could gift him the house but he would have to pay tax on the value on my death ... on a sliding percentage scale but if I lived 7 years it would be tax free.

 

BUT .. in my circumstance ... that would mean I would be homeless if I return to England.  I may get ill, or muck up visa requirements or get fed up.

 

I read that I cannot have anything to do with the home.  I cannot live there as his guest.  Well I can but it invalidates his getting it tax free on my death.  I cant be his guest.

 

So its a freaking nightmare ... if I let it get to me.  But I dont let it. Just aware..

 

I need the comfort of having a nice home to go to .. not a cheap bedsit in a bad area (a horrible thought I have).  I got to look after myself after working hard all my life .. 80 plus hour working weeks for decades. Not to mention paying a huge divorce settlement

 

ANOTHER horrible thought for him and me.   In the UK (some areas) house prices are going up 10 percent per year. 

 

My house is worth about £500,000 (I think more but keeping the maths easier).  So its increasing by £50,000 a year.  At 40 % he will need to find £20,000 a year just to pay the death tax .. i.e just to stay still financially.

 

£500,000 is the death tax allowance when leaving a sum including a home to your child(ren).

 

In 5 years at 10 percent property inflation he will have to pay £100,000 death tax.  Its complicated because I should be leaving cash too ... depending on how long I live. 

 

It will be taxable too at 40 percent.  

 

Its freaking unfair.  I veer between not wanting to spend to help him pay the tax so he can keep the house to thinking ferk it ... the UK gov are gonna get 40 percent of the little they left me ... after me paying tax on the money originally.  So I think spend it.

 

My hope is Boris will honour his pledge from years ago .. I think 2 winning elections ago to revamp death tax to a flat rate 10 percent for everyone .. leaving peanuts or squillions.

 

But covid expense has ferked lots of plans.

 

10 percent property inflation means they will get a huge death tax bonanza but means family houses will need to be sold to pay it.  It effects rich with mansions more than plebs like me so I am surprised it not seem to be imminent.

 

But it will be fairer.   Didnt mean to have a rant but feel  better for it.

 

I think Boris reads this forum avidly.

 

Its not the end of world for my son ... getting a nice house but having to downsize to pay the death tax.   

 

I aint gonna torture myself over him too much  ... but he would like to keep it as its now his home of 10 years.

 

 

 

  • Popular Post

The 7 year rule is for Inheritance tax only, when it comes to care fees there is no time limit , the piece below was taken from, robert barber solicitors, you need to get professional help with this, to avoid falling into issues later.                       

 

 can I gift my house to my children to avoid care home fees?”

You may well be seen as intentionally depriving yourself of an asset by the authorities. People usually wish to transfer ownership to family members because they believe that in the event that they go into residential or nursing care the house will not be counted for the purpose of calculating how much of their care home fees they would have to pay themselves. The local authority usually sees this as you deliberately reducing your assets so as to qualify for state funded care and they have the discretion to refuse to pay for your care because of this.

2 hours ago, howerde said:

The 7 year rule is for Inheritance tax only, when it comes to care fees there is no time limit , the piece below was taken from, robert barber solicitors, you need to get professional help with this, to avoid falling into issues later.                       

 

 can I gift my house to my children to avoid care home fees?”

You may well be seen as intentionally depriving yourself of an asset by the authorities. People usually wish to transfer ownership to family members because they believe that in the event that they go into residential or nursing care the house will not be counted for the purpose of calculating how much of their care home fees they would have to pay themselves. The local authority usually sees this as you deliberately reducing your assets so as to qualify for state funded care and they have the discretion to refuse to pay for your care because of this.

I agree.   Potentially a 100 percent  "tax" on any money / property I have. My son very aware of that making him "homeless" / getting nothing.

 

100 percent 'tax' with no £500,000 threshold so devestating.  

 

Hey ho.   Best I not think tooooooooo much.   My son may have a nice house for life or nothing.

 

I guess if oldies are just frail its manageable at home .. here or in UK.   

 

When an oldies mind goes care is gonna get expensive.  

  • Author
On 8/24/2021 at 12:37 PM, PAWNEESE said:

My son has lived in my house in England during the nearly 10 years I have lived here.  

 

We looked into me gifting the house to him but the lawyer we contacted said I /we would have to pay 40 percent capital gains tax on the difference between the market value (£500,000 plus) and the price I paid for it (£42,000) many years ago.

 

A huge sum he has not got ...... and that I was certainly not going to pay to give him my house..

 

There is much doubt that this advice was correct.    A bank manager said that was rubbish. But it ended my interest in giving him my home.

 

Actually .... I have always thought that I could gift him the house but he would have to pay tax on the value on my death ... on a sliding percentage scale but if I lived 7 years it would be tax free.

 

BUT .. in my circumstance ... that would mean I would be homeless if I return to England.  I may get ill, or muck up visa requirements or get fed up.

 

I read that I cannot have anything to do with the home.  I cannot live there as his guest.  Well I can but it invalidates his getting it tax free on my death.  I cant be his guest.

 

So its a freaking nightmare ... if I let it get to me.  But I dont let it. Just aware..

 

I need the comfort of having a nice home to go to .. not a cheap bedsit in a bad area (a horrible thought I have).  I got to look after myself after working hard all my life .. 80 plus hour working weeks for decades. Not to mention paying a huge divorce settlement

 

ANOTHER horrible thought for him and me.   In the UK (some areas) house prices are going up 10 percent per year. 

 

My house is worth about £500,000 (I think more but keeping the maths easier).  So its increasing by £50,000 a year.  At 40 % he will need to find £20,000 a year just to pay the death tax .. i.e just to stay still financially.

 

£500,000 is the death tax allowance when leaving a sum including a home to your child(ren).

 

In 5 years at 10 percent property inflation he will have to pay £100,000 death tax.  Its complicated because I should be leaving cash too ... depending on how long I live. 

 

It will be taxable too at 40 percent.  

 

Its freaking unfair.  I veer between not wanting to spend to help him pay the tax so he can keep the house to thinking ferk it ... the UK gov are gonna get 40 percent of the little they left me ... after me paying tax on the money originally.  So I think spend it.

 

My hope is Boris will honour his pledge from years ago .. I think 2 winning elections ago to revamp death tax to a flat rate 10 percent for everyone .. leaving peanuts or squillions.

 

But covid expense has ferked lots of plans.

 

10 percent property inflation means they will get a huge death tax bonanza but means family houses will need to be sold to pay it.  It effects rich with mansions more than plebs like me so I am surprised it not seem to be imminent.

 

But it will be fairer.   Didnt mean to have a rant but feel  better for it.

 

I think Boris reads this forum avidly.

 

Its not the end of world for my son ... getting a nice house but having to downsize to pay the death tax.   

 

I aint gonna torture myself over him too much  ... but he would like to keep it as its now his home of 10 years.

 

 

 

Thanks a lot, lots of food for thought there. I thought it might be a simple case of waiting 7 years, but not.

On 8/24/2021 at 8:47 AM, Neeranam said:

wanting to sell her house to me, to avoid the authorities taking it if she goes into a care home. 

It would appear that she's unaware of "deferred payment agreements".  These are offered by every council in England & Wales.  (Don't know about other parts of the UK.)  The individual doesn't pay for care at the time it's incurred, but pays when the home is eventually sold, or from her estate when she dies.  Effectively it's a loan from the council, and attracts interest.  There may also be an arrangement fee.

On 8/24/2021 at 8:56 AM, Will B Good said:

If the sale is at the market price it is just a sale......if she gifts it to you and she dies within 7 years then you will be liable for tax as it might be considered income (I guess there might be a sliding scale).

 

The local authority will still have access to her funds though....so when you pay her they will be eyeing her bank account anyway. I think come the crunch she can keep up to £23,000 as personal savings.

Just out of the box

 

What happens if mom sells you the house on a rent to own contract 20 year contract.  With the stipulation that if she passes before that for any reason that you would then pay her estate the funds owing on the house.

Of course she can in her will give you enough that you could pay the debt off and  what ever the tax man requires.

You could also agree at that time that she will become a renter of the house for guess what the amount of the RTO.

 

 

 

Where you pay her X amont a month on 

 

2 minutes ago, kingstonkid said:

Just out of the box

 

What happens if mom sells you the house on a rent to own contract 20 year contract.  With the stipulation that if she passes before that for any reason that you would then pay her estate the funds owing on the house.

Of course she can in her will give you enough that you could pay the debt off and  what ever the tax man requires.

You could also agree at that time that she will become a renter of the house for guess what the amount of the RTO.

 

 

 

Where you pay her X amont a month on 

 

Oh boy....that made my head spin.

2 minutes ago, Will B Good said:

Oh boy....that made my head spin.

Just think what it will do to the tax people LOL

On 8/24/2021 at 12:37 PM, PAWNEESE said:

We looked into me gifting the house to him but the lawyer we contacted said I /we would have to pay 40 percent capital gains tax on the difference between the market value (£500,000 plus) and the price I paid for it (£42,000) many years ago.

That may well have been incorrect. If you are non resident you used to be exempt from capital gains tax this however changed in about 2016 so the value for for the gain was from the market value then not the total gain.
 

Contacting a lawyer for advice in tax matters is usually a bad idea, you need a tax accounting firm specialising on foreign residents matters.

 

in my case the capital gain will not go from £9,950 (the original purchase price) but £250,000. Quite a big difference isn’t it?

On 8/24/2021 at 8:47 AM, Neeranam said:

Did anyone have any experience with paying inheritance tax on an estate in the UK, when you are a Thai resident. 

 

My mother has just turned 80 and wanting to sell her house to me, to avoid the authorities taking it if she goes into a care home. 

 

I'm not sure yet, but think there's is a 7 year rule about legality of the sale of the house. 

 

Is there anything that I should know or do to prevent problems down the line? 

I strongly recommend contacting an accounting firm that specialises in tax advice for foreign residents.
 

The tax situation is constantly changing so any advice here will probably be based on older information.

 

I have an accounting firm in the U.K. that does my tax return (over 30 years now), they also manage my investment used for my pension (that is tax free), they have several overseas branches and specialists in non resident tax planning. The advice is not free though an initial talk for you to decide if they are suitable would almost certainly be at no cost. The areas they cover are

13715872-AA31-4A75-94C1-D190E2C33738.jpeg.0743d8c0aaeed911ceb23eb41c93022a.jpeg

if that is of interest PM me for contact information and any questions.

 

Be very careful your idea may not work . I undertand some have been caught doing what you are looking at .  suggwst checking with a UK lawyer for  this.  I checked out Age UK  and pasted this for info .Deprivation of assets
If someone intentionally reduces their assets - such as money, property or income - so these won’t be included in the financial assessment for care home fees, this is known as ‘deprivation of assets’. If your local council concludes you have deliberately reduced your assets to avoid paying care home fees, they may still calculate your fees as if you still owned the assets. Copied from https://www.ageuk.org.uk/information-advice/care/paying-for-care/paying-for-a-care-home/deprivation-of-assets/

 Good luck

On 8/24/2021 at 10:37 AM, BritManToo said:

Mom should stay in her house, her children should move in and care for her.

They inherit, and the kids who didn't look after her should get nothing.

If the kids want the government to care for her, the government should get the house.

I don't have much time for people that discard their elderly parents.

If one of the kids moved in and is over 60 years old the property would be disregarded from any financial assessment undertaken by the local council

On 8/24/2021 at 8:56 AM, Will B Good said:

If the sale is at the market price it is just a sale......if she gifts it to you and she dies within 7 years then you will be liable for tax as it might be considered income (I guess there might be a sliding scale).

 

The local authority will still have access to her funds though....so when you pay her they will be eyeing her bank account anyway. I think come the crunch she can keep up to £23,000 as personal savings.

My mother went into a care home around 7 years ago, the home was sold to pay for her care home expenses.

My brother became her POA. 

I'm not sure of the correct name but he bought a policy that paid her expenses for 6 years, after that the insurance company had to pay her monthly costs until death.

She received a small monthly allowance from the social services and a small widows pension.

Upon her death in 2020 her will was executed by my brother, however the amount of savings in her bank had to be declared to the courts.

We found that the minimum level to be declared changes with each bank.. 

So make sure you put her savings into the right one.

 

 

Yes 7 year rule re social care purposes, the cap is £23,250 (under care is free, over is taking into account for care costs) the legal term for offloading the house or any other part of a persons estate is 'Deprivation of Assets' If the Local Council decides that assets were moved etc to avoid paying care home fees then these assets will be takin in as consideration as if they still owned them.

 

Suprised not one has mentioned a 'Deed of Trust' instead of giving it over or selling, you get a Solicitior to draw up a Deed of Trust this can show all beneficaries (op mentioned three) on it Can be held at Land Registry or with Solicitor, basically the deed shows the house is actually owned by the persons named on trust and your parent/s live there until the day they pass. This will still be looked at as above though. 

 

Link here for age UK explains prob all you need to know

 

https://www.ageuk.org.uk/information-advice/care/paying-for-care/paying-for-a-care-home/deprivation-of-assets/

utterly unfair isn’t it.

those that put something aside for a rainy day, or even instead of paying into a pension fund, have to pay, while those that didn’t save a dime get the service for free.

You should look up "Deprivation of Assetts"

 

Your mum theoretcially cannot gift you her house and contiune to benefit from living in it, I guess its like saying "You cant have your cake and eat it"

 

See:

 

https://www.ageuk.org.uk/information-advice/care/paying-for-care/paying-for-a-care-home/deprivation-of-assets/#skipToContent

 

Good luck.

 

Paul

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