Looking for advice on selling a second property
Discussion
Hi all, hoping you may be able to help me out a bit..
My wifes mother recently passed away and whilst there is no rush to do so at some point we'll have to sell her house. Around 10 years ago she "sold" the house to my wife and her other daughter, as her husband had Alzheimers she was worried that if she died first (as was sadly the case) the proceeds from the house would be taken by the Government to pay for his care.
Basically what I'm asking is how much the girls will be taxed when selling the property and is there any sort of tax relief that they could claim?
Their mum lived in the house on for the last 5 years on her own as her husband has been living in a care home. Obviously not paying any rent. I'd reckon the house is worth circa £250k.
Thank you very much for any help or advice you can offer.
Grant
My wifes mother recently passed away and whilst there is no rush to do so at some point we'll have to sell her house. Around 10 years ago she "sold" the house to my wife and her other daughter, as her husband had Alzheimers she was worried that if she died first (as was sadly the case) the proceeds from the house would be taken by the Government to pay for his care.
Basically what I'm asking is how much the girls will be taxed when selling the property and is there any sort of tax relief that they could claim?
Their mum lived in the house on for the last 5 years on her own as her husband has been living in a care home. Obviously not paying any rent. I'd reckon the house is worth circa £250k.
Thank you very much for any help or advice you can offer.
Grant
Hi Eric, thankfully was taken care of 100% legally by their lawyer.
It turns out I got it a touch wrong, she didn't sell it to them.
14 years ago due to a few health concerns which I'll not go into she signed the deeds over to the two girls with her remaining in the house as a non paying tennant until she passed away.
Any advice or info you can offer on the matter would be fantastic.
Thanks
It turns out I got it a touch wrong, she didn't sell it to them.
14 years ago due to a few health concerns which I'll not go into she signed the deeds over to the two girls with her remaining in the house as a non paying tennant until she passed away.
Any advice or info you can offer on the matter would be fantastic.
Thanks
Hmmm.
So there was no "sale" as such.
So she gave the property away but lived there rent free?
I am sure HMRC would be VERY interested in this arrangement.
I would suggest you get some legal advice on the way this has been set up as there could be both Inheritance Tax and Income Tax implications in the current arrangements.
So there was no "sale" as such.
So she gave the property away but lived there rent free?
I am sure HMRC would be VERY interested in this arrangement.
I would suggest you get some legal advice on the way this has been set up as there could be both Inheritance Tax and Income Tax implications in the current arrangements.
Hi Eric, thanks for your response.
I'm told at the time the lawyer dealing with the arrangements looked into everything very closely and assured all involved that it was completely above board.
This did all happen 14 years ago, I know certain laws regarding Deeds etc have changed since then, I have been told as of 8 years ago you would not of been allowed to transfer the Deeds in such a way.
I don't know if it makes any difference, when the house was signed over it was morgage free so thats why there was no need (that plus the fact that she was family) to charge any rent. If it is your own property is not up to you whether or not you charge rent? It was written into the deeds that for as long as they lived or until due to health they had to go into a home they had the right to stay in the proerty.
On the Inheritance Tax front, if this came into play surely at time of death it is well below the threshold? I was thinking it would be CGT the girls would have to pay.
Many thanks again Eric, your help & opinions are greatly appreaciated.
I'm told at the time the lawyer dealing with the arrangements looked into everything very closely and assured all involved that it was completely above board.
This did all happen 14 years ago, I know certain laws regarding Deeds etc have changed since then, I have been told as of 8 years ago you would not of been allowed to transfer the Deeds in such a way.
I don't know if it makes any difference, when the house was signed over it was morgage free so thats why there was no need (that plus the fact that she was family) to charge any rent. If it is your own property is not up to you whether or not you charge rent? It was written into the deeds that for as long as they lived or until due to health they had to go into a home they had the right to stay in the proerty.
On the Inheritance Tax front, if this came into play surely at time of death it is well below the threshold? I was thinking it would be CGT the girls would have to pay.
Many thanks again Eric, your help & opinions are greatly appreaciated.
As it predates the current rules, it may have escaped the worst aspects of the tax changes. For instance, if you gift a property and then remain in place as a rent fee tenant, in current tax law, the "landlord" should account for Income Tax on the market value of the rent the tenant ISN'T paying - in a very similar way to the Employer's Benefit in Kind system.
I would strongly advise the various parties involved in this arrangement to seek up to date legal advice on where things stand at the moment. It might confirm that everything is OK - but whatever the case, at least you will get peace of mind.
I would strongly advise the various parties involved in this arrangement to seek up to date legal advice on where things stand at the moment. It might confirm that everything is OK - but whatever the case, at least you will get peace of mind.
Edited by Eric Mc on Tuesday 19th January 11:39
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