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TonyTax
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Although at the present there are no problems, we are concerned

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Although at the present there are no problems, we are concerned that our house may be used in the future to fund residency in a care home. We have a friend who has put half her property in her daughter's name so that her daughter would get something. We are considering doing the same by putting half our property in our son's name. He already has his own home ( with a mortgage). Is this worth doing?
Thank you
Carol
Submitted: 1 year ago.
Category: Tax
Expert:  TonyTax replied 1 year ago.
Hi.

I'm not an expert on local authority rules and regulations since it isn't really anything to do with tax so I would suggest you look here, here, here and here for more information on this. It is a liquid topic, however, and the government keeps talking about placing limits on care fees but as you learn when you read the information I've pointed you towards, the reliefs are not as generous as the government would have you believe.

There are ways to protect assets including trusts but they have tax implications depending on the value of the property which is put into trust. My understanding is that if a property is given away, a local authority can effectively ignore that and take its value into account when assessing how much you need to pay for care, if anything, if the intention was to avoid fees even many years before the need for care arises.

If you give away your home, it will constitute a disposal for Capital Gains Tax purposes but if the property has always been your main home, there will be no CGT to pay as the gain will be exempted by the main residence rules. It will also be treated as a gift for Inheritance Tax purposes which would normally fall out of your estate after seven years but as you will no doubt continue to live there, it will be a gift with reservation of benefit and it will not fall out of your estate until seven years pass after the cessation of the reservation of benefit or you start to pay a market rent.

I hope this helps but let me know if you have any further questions.
TonyTax, Tax Consultant
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Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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