Hi, My partner and I would like some information/advice on the viability of the following: My partner's mother lives alone in a house value approx £125,000. As her sole offspring my partner will eventually inherit the house when her mum passes (Her Mum is currently 60 yrs old but in poor health although she could last many more years and I hope she does.) Because her Mum has limited income we wondered whether we would be able to release the equity tied up in the house (there is no mortgage) by having the house signed over to my partner in exchange for us paying her a monthly income - on a similar basis as the many equity release schemes there are around and on a business footing (legal documents/contracts and the like). It seems a shame for her to struggle with all the cash she has tied up in the house. We would rather allow her to spend some of it now rather than give it away later. Is this possible and if so what are the factors we need to be aware of? What would the position be with CGT and if she needed care provided by the local authority? Thanks for your time. Jock Munro
Thanks,If she sells the house for anything other than full value and she cannot afford to pay for her care, then the local authority can set the sale aside. Would rental income be enough to pay for care or is that not even an issue?JL
Hi, Thanks for your reply.The house would probably only generate £500 pcm gross so it would probably not be enough to cover any care costs. Care costs aside, what are the consequences in terms of CGT and/or IHT? And what would be the best way to mitigate against both?Thanks
If her whole assets are worth less than £325k there is no IHT.CGT applies when the house is sold at profit over aquistion price. the less you pay the more CGT liability. If you inherit on death there is only CGT when you sell later at profit over inherited value. You escape CGT if it is if it is yr main residence.Politicians seem to be excellent that that!More?Please dont forget to press accept. Thanks. I will continue to answer extra points at no cost.
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