osterley

Ok - this must be getting more common for people
One of your close relatives is likely to go into Healthcare within the next 5-10 years (or sooner) and if you have assets of over about £20k then they have to pay for the care which is circa £400 a week. If they have assets of less than this then the local authority will fund most - you can 'top - up' to get your relative into a 'better place'

My question is:
How do I go about the process of transferring my Grans house into my name or someone elses?
If its less than circa £300k there are no IHT implications
But what about Income tax implications and what are the rules - i.e. if my Gran transfers the property to me, or I do under Power of Attorney and she continues to live there am I supposed to get a rent from her for it to be valid (remember I am not concerned over Inheritance tax implications)

Is there a timescale by which a local authority health trust can look into this? - i.e. can they say - well your Gran had the assets 2 years ago and therefore you still have to pay for her care?

Should the property go to me at zero cost?
Stamop duty implications?
Solicitors costs?
Income tax on supposed 'deemed' rents

Someone must have already gone down this route to protect their inheritance?

brumdaisy

ooh u mean fraud

should get plenty of tips on here

osterley

Why is this fraud
Its called minimising liabilities and improving your inheritance?

TopBanana

It's called tax planning.

osterley

Exactly!
I'm sure some resident solicitors on here will have a good answer

Cupramax

Lol, she cant just gift you her house and they wont notice... read this.

http://www.hmrc.gov.uk/leaflets/iht2.pdf

brumdaisy

Im sure they will..... like tax planning is another word for tax evasion

been there discovered it wouldnt work and that I wouldnt be able to evict my dad and buy an island in the bahamas

warrenm2

No, tax planning is another phrase for tax avoidance which is perfectly legal and desirable and is what accountants are employed to do every day.

Tax evasion is when you are liable for tax and then dont pay it, tax planning is arranging your affairs so that you are not liable for tax in the first place

brumdaisy

I repeat, been there, tried it, would have either had to go into hiding or get clobbered for tax, which is what the original poster is trying to avoid

brumdaisy

Jeez u do what someone asks and all they do is gripe at u because they dont like the ansa

TopBanana

Brumdaisy since you don't know what you're talking about why don't you butt out of the thread? Go and hang around in muppets if you're just bored.

ScoobyDoo555

Would be interested in this too, as ma & pa are going through this with grandmother........

Dan

andy97

iTrader: (1)

Life interest trust, is an option, your gran could consider, we've done it on several properties. see a decent solicitor as there has been some recent changes after the budget which need sorting out.

Tax planning is tax avoidance (perfectly legal), where as tax evasion is not legal.

osterley

ok - Solicitors it is. Was trying to get some advice before I went to a solicitors
At least my parents and Grandmother know about it
They just want to give me some money in the long term - but clearly my Grandma still wants to live in her house

I have tried looking over the web but its a bit complicated

Life Interest trust - I will search on

What I planned to do was to have the title deeds trs'd to my sister (a Uni student) and class the house as her Principal Private residence with My Gran living their rent free. The house is worth about £125k - so just under the stamp duty threshold making it easier? and because it would be a principal private residence any gain after trs is free from Capital gains tax
But I need to understand if my Gran living their rent free is an issue (if the property had been above the IHT limit then yes this would have caused an IHT issue) - also need to think of Council tax implications and the £400 gas relief my Gran gets - would she still be entitled to this - would my sister actual have to prove she lived their (she wouldnt actually live there - but could do for a while if need be)

Frosty The Snowman

To be exempt from the inheritance tax you would have to gain the benefit from the property, either you move in, rent it to some third party or your gran pays you full market value rent. If any of these occurs and your gran doesn't die within 7 years it's yours free and clear, otherwise it's not and you would have to pay inheritance tax.

osterley

Frosty the Snowman

Not quite as the amount to be transferred is below the current IHT threshold - therefore this is not an issue - IHT implications I am not concerned about in this particular situation

andy97

iTrader: (1)

With a life interest trust it has an advantage that it is ring fenced against creditors if any of the trustees go bankrupt ( the trust owns the house)

There are ways and means to avoid all forms of tax liabilities if you know who to ask

Tiggs

she will run into deleberate deprevation issues if she does this.

osterley

Tiggs
Can you explain
I know what your saying - I would need to investigate if this was factual - afterall theres nothing to stop her giving away all her assets - I know there must be some sort of 'time period' by which a health trust would say - NOPE you cant do this - but I think its only about 2 years max - although I dont know for sure

Tiggs

u need the dep of healths "charging for residential accomadation guide" (CRAG)

best bet is to use Age Concerns web site for the summary of it - the info i give to clients that ask about this all comes from there.

be prepared for a bit of a grey area though (and do your homework...or pay someone to do it - the local authority wont take "but scoobynet said it was fine...." as a valid reason for your actions )

osterley

Thanks Tiggs
Very informative - another area for me to look into
Yeah I know I cant rely on good ol scoobynet - but hey this would appear to be one of the best forums for advice on the web - thats why I came on here
Think I'll be here to stay, especially as I have a Scoob as well...........

Now I just need to know when the next Southern Rolling road day is, the next track days from June and insurance!!

osterley

Tiggs
Excellent stuff on age concern- I also downloaded CRAG - but factsheet 40 (deprivation of assets) from Age Concern gave me the relevant reference to the 100 page Crag booklet

What seems clear is that the time-limit is not so extensive - I think 2 years max would be reasonable

My other concern was potential CGT - so I'll trs to my sister (student in her final year) who can take the house as her PPResidence. I'm not sure how long you need to live somewhere for it to be your PPR (then you are exempt from CGT for 3 years after you've left plus £40k exemption and current allowance on top) - think its 6 months

Only issue I now have is the minor stuff like the actual transferring of Title deeds - I need to consider council tax implications for Granny - thats what I'll look at next if there are 2 people living (supposedly) in the property

You all must think I'm mad, but my stepmother has just been through the whole process with her mother over this whole scenario. My step Grandmother had about £80k in savings and was told about 5 years that she must give her savings away or effectively lose everything (she was going slowly senile (sp?) but she said that the people who scrounged off the state were scum and she would never be a scrounger)
Now because she has over £20500 in assets she is paying £400 a week for a care home (she hates being in a care home). So her money will last about 3 years before she gets to the £20k level.

I'm trying to avoid that and give some real inheritance down the line - of course it may all be totally academic in the end as my Gran may not go the same way
I may look at the stats of the proportion of people who end up in care homes, but inevitably I think its increasing each year

andy97

iTrader: (1)

You need to speak to a tax consultant re the CGT, might cost you a few quid in fees but top notch solicitors and tax consultants are worth every penny you will save in both areas.

Good luck

We've only one more relative to convince over these issues!

Andy