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Mother Selling Me Her UK house

Featured Replies

On 8/26/2021 at 6:50 PM, Pootegg said:

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

Makes me wonder why anyone would own a house instead of renting.

How long before one moves into a care home can one sell the house to children without it being regarded as avoiding care costs? Simplest answer IMO is to sell/ gift it as soon as possible and endeavor to spend all the money, or at least all the money they know about. I guess it depends on how much the children loves one.

 

Would setting up a family trust or a company to own the house make any difference?

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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

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  • 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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42 minutes ago, malthebluff said:

Of course you dont tell the tax man  you living in thailand no retiree would as their pension get frozen. You use this as your main home ( address) the rent a room is tax free up to 7500 so this is added to your tax allowance it's just a loop hole in the law not fully legal but it is away from the init paying nheritance tax the op asked about 

 

 

Totally illegal, not a loop hole.
 

There are extremely good reasons to tell the truth to the HMRC. 

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.

 

 

 

Better to talk to an accountant about tax related issues than a lawyer or a bank manager.

5 minutes ago, sometimewoodworker said:

Totally illegal, not a loop hole.
 

There are extremely good reasons to tell the truth to the HMRC. 

The avoiding inheritance tax is completely legal you sell your assets or even equity release or o a lifetime morgage anything to lower your estate for when you die  and the question was how to avoid the inheritance tax. The rent a room is legal to if you live in the UK as your main home  and you have to join the scheme to take advantage of the 7500 so the tax man will know or would be informed  and you are allowed to  stay in Thailand 3 month a year. But yes if live here full time  illegel. But the question was avoiding inheritance tax and the only way to do that is to make sure your estate is low when you die hence not having a house as part of said estate selling to son cheap its all legal. At the age of 80 I dont think she would want to gift it because of the 7 year rule. The op dosnt have to rent the house or charge any rent she just lives there free so why would that affect any tax and anybody can buy a house in the uk and live in another country that's not illegal

1 minute ago, FritsSikkink said:

Better to talk to an accountant about tax related issues than a lawyer or a bank manager.

Just sell him the house very cheap 

1 hour ago, malthebluff said:
2 hours ago, sometimewoodworker said:

Totally illegal, not a loop hole.
 

There are extremely good reasons to tell the truth to the HMRC. 

The avoiding inheritance tax is completely legal you sell your assets or even equity release or o a lifetime morgage anything to lower your estate for when you die  and the question was how to avoid the inheritance tax. The rent a room is legal to if you live in the UK as your main home  and you have to join the scheme to take advantage of the 7500 so the tax man will know or would be informed  and you are allowed to  stay in Thailand 3 month a year. But yes if live here full time  illegel. But the question was avoiding inheritance tax and the only way to do that is to make sure your estate is low when you die hence not having a house as part of said estate selling to son cheap its all legal. At the age of 80 I dont think she would want to gift it because of the 7 year rule. The op dosnt have to rent the house or charge any rent she just lives there free so why would that affect any tax and anybody can buy a house in the uk and live in another country that's not illegal

The totally illegal reference was to your sentence 

Quote

Of course you dont tell the tax man  you living in thailand no retiree would as their pension get frozen.

Certainly you can, and probably should structure estates to avoid as much tax as possible. 
 

You propose the “rent-a-room” scheme. It does nothing for the OP.

 

selling Cheap may not be legal or the sale price may be disregarded for tax purposes so it can be assessed at a much higher value than you would like, quite possibly significantly higher than the market value of the house.

 

as I have said a good tax accountant is needed as tax law is in flux and what may have worked before may not work today

2 hours ago, sometimewoodworker said:

 

On 8/24/2021 at 9:14 AM, MarkT63 said:

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.

 

 

Could she not live in it rent free as a caretaker ? or 'rent' one room.

On 8/27/2021 at 8:17 AM, thaibeachlovers said:

Makes me wonder why anyone would own a house instead of renting.

So they can realise the value of it when they're needing a good care home in later life (unless their children try to take it away as the OP appears to be wanting to).

On 8/28/2021 at 8:09 AM, brianthainess said:

Could she not live in it rent free as a caretaker ? or 'rent' one room.

Hey, I think the tax man would see through that one!

 

 

Not sure of your tax status in the UK - did I read you are not a UK national?

 

If you are registered for UK tax and do not have any other income you could "rent" the house to her for GBP 500 pr month and still be below the GBP 12,570 threshold for tax. If your tax status is more complicated, or you have other income streams in the UK, I would get some professional advice on the best way forward. ????

 

  • 2 weeks later...
On 8/24/2021 at 12:37 PM, PAWNEESE said:

It effects rich with mansions more than plebs like me so I am surprised it not seem to be imminent.

The rich will have their mansions and their money in Trust Funds and not pay a penny of tax on them.

On 8/24/2021 at 12:20 PM, Pumpuynarak said:

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.

Did you have to pay property taxes / stamp duty on the transfer?

On 8/26/2021 at 8:40 PM, sometimewoodworker said:

Non-resident status takes a long (years) time to achieve just not living in the U.K. doesn’t make you non-resident.

You're confusing Non-Resident for Tax Purposes and Non-Domiciled.

 

Non-Res is 183 days, Non-Dom is 3 years.

22 hours ago, LongTimeLurker said:

Did you have to pay property taxes / stamp duty on the transfer?

Sorry but i can't remember definatively but i think i did.

On 9/11/2021 at 2:34 PM, LongTimeLurker said:

Non-Res is 183 days, Non-Dom is 3 years.

It's extremely difficult to establish a domicile of choice.  It most certainly doesn't happen after 3 years of being away from the UK, and often doesn't happen if one's been away 20 or more years.  It depends upon how completely one's severed one's ties to the UK and establishing that one is not ever going to return to the UK to live.  Under normal circumstances, domicile is only determined after one's death.

4 hours ago, Oxx said:

It's extremely difficult to establish a domicile of choice.  It most certainly doesn't happen after 3 years of being away from the UK, and often doesn't happen if one's been away 20 or more years.  It depends upon how completely one's severed one's ties to the UK and establishing that one is not ever going to return to the UK to live.  Under normal circumstances, domicile is only determined after one's death.

According to the UK government you can declare a domicile of choice after 3 years of living in that country, put it in your Will.

 

Whether you can prove you are non-domiciled for inheritence tax purposes, or even in some cases, income tax purposes, is a different matter.

1 hour ago, LongTimeLurker said:

According to the UK government you can declare a domicile of choice after 3 years of living in that country

Again you are wrong.  If you acquire a domicile of choice (and that involves far more than just living in another country), then for taxation purposes you will still be considered UK domiciled for a further three years.

In other words (and putting this a bit simplistically), leave the UK, sever virtually all connections with the UK, prove that you have no intention of ever returning to the UK, and then wait a further three years.  Only the will you be considered non-domiciled.  And even then the tax man may well challenge that when you die.

 

And whether you put anything in your will about domicile is utterly irrelevant.

On 8/27/2021 at 8:17 AM, thaibeachlovers said:

Makes me wonder why anyone would own a house instead of renting.

How long before one moves into a care home can one sell the house to children without it being regarded as avoiding care costs? Simplest answer IMO is to sell/ gift it as soon as possible and endeavor to spend all the money, or at least all the money they know about. I guess it depends on how much the children loves one.

 

Would setting up a family trust or a company to own the house make any difference?

If you are seen to be avoiding they can still get you .. 7 year rule may work ....

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