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Ask Clare Your Own Question
Clare, Solicitor
Category: Law
Satisfied Customers: 34905
Experience:  I have been a solicitor in High Street Practice since 1985 with a wide general experience.
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My mother is 78 ..can I buy her house when it is worth

Customer Question

My mother is 78 ..can I buy her house for 120k when it is worth approx 160k and leave her living there until she dies ..she would continue paying utilities and we would live abroad but come home and look after her if needed. She would only then go in a home if she got dementia and we couldn't cope.
Submitted: 2 years ago.
Category: Law
Customer: replied 2 years ago.
Currently she has Parkinson's and is independent ..her monetary status is that she has this home and about 30 k savings. She may then want to give some of the 120k to her other son. The house though would then becowned by us but with a caveat that she could live there for the rest of her life
Expert:  Buachaill replied 2 years ago.
1. This is perfectly acceptable form of arrangement whereby you would grant your mother a right of residence in the house, when it is sold to you, in return for a price slightly under the market value. This is legally uncontestable and sound in law. However, you should ensure that the deal is registered in the Land Registry with her right of residence registered as a burden on the Folio so your mother is also protected. Otherwise, you always run the risk of it being unlawful because it would not fulfill the statutory requirement in the Statute of Frauds that it be in writing and your mother protected against an improvident bargain.
Customer: replied 2 years ago.
Please could you answer too the part about if she is admitted to a care home later down the line ...say within seven years would that be a problem and would we owe anything ? also the part about giving some of 120k to her other son Gareth .. is she allowed to do this ... and we need therefore to know if this is perfectly acceptable not only in the eyes of the law but in the eyes of HMRC but also in terms of the Care Act?
Expert:  Buachaill replied 2 years ago.
2. If your mother doesn't own anything, then she cannot contribute to her costs of the care home. her right of residence would be worth something but very little, as it would only exist until she died. So there wouldn't be a charge on the property. However, any distribution to her son Gareth might be questioned if it was seen that she was dissipating her assets. I would advise her to get specialist advice on this before she gives over her money to her son, as the rules in the Care Act are convoluted. It will also depend upon when she enters into care and how long this takes place after she gifts away her assets to her son, as under Inheritance Tax any dissipations within seven years of her death form part of her estate for Inheritance tax purposes and the Care Act.
Expert:  Clare replied 2 years ago.
HiThank you for your questionThere is no problem whatsoever in your purchasing the property at an undervalue although the land Registry fee will be payable on the full value.Unless your mother has substantial other assets which would take her over the £325,000 threshold Inheritance Tax is also unlikely to be a problem.However if your mother does need to go into a Care home and requires assistance with the fees then I am afraid both the £40,000 underpayment and any monies given to your brother would be taken into account and the Local Authority would assume that those monies are in fact available to your mother when they are assessing her assetsI hope that this is of assistance - please ask if you need further detailsClare
Customer: replied 2 years ago.
Sorry clare but if an arrangement between us and mother how does anyone know what value is if no mortgage involved?
Expert:  Clare replied 2 years ago.
The transaction will have to be Registered at the Land Registry who would query any undervalue.
In addition when the time comes the Local Authority will also investigate