Buying mums house

[colin1096]

Sorry if i have posted this in the wrong section but here goes .

 

Me and my partner currently live with my mum in her house . The house is paid in full and my father has passed away .

 

My mum wants me to buy the house for £160,000 so she can give my 2 brothers and other sister £40k which is their inheritance and £40k back to me. I have about 50k in the bank so we said we would buy the house for £120k thats with my inheritance off and i would get a mortgage for 70k which me and my partner could afford easily with my 50k deposit against the mortgage .

 

I rang halifax and they agreed and everything was fine with the mortgage . I went in to see them today and when they heard i was buying my mums house they said that i wouldnt be able too . My mother is 77 and when i buy the house will continue living with me untill she passes away . Me and my partner are happy for this to happen plus we get on the property ladder . The bank said that with my mothers age that this was not possible .

 

We are totally gobsmacked and wondered if any one knew another way around this .

 

Thanks in advance

Edited February 16, 2018 by honeybee13
Paras

[honeybee13]

Hello there, I'm sorry to hear about your problems.

 

I don't quite understand why your mother's age stops you buying the house. Do you have anything in writing from the Halifax please?

 

HB

[colin1096]

they said its all to do with the 7 year law if she gets ill in that period and has to go into care then i could lose the house

[honeybee13]

Ah, thank you for that.

 

It sounds as if they're worried about your mum giving the money away now and asking the local authority to pay for her care if she needs it later, which would come under the Deprivation of Capital rules.

 

I'm not quite sure of the connection with the mortgage atm, I'm sure others will know.

 

HB

[honeybee13]

But the seven year rule they're talking about I would think could be inheritance tax, I didn't think there was a time limit for deprivation of capital.

 

As I said, it would be interesting to see anything in writing [anonymised] from the Halifax.

 

HB

[Guest]

ah, the so called 'dementia tax' issue?

[honeybee13]

I'm not sure it's as new as that, Ford. Local authorities have been able to claim deprivation of capital for a long time.

 

HB

[Guest]

but didn't the rules change more recently, more against joe public as usual. (if someone has assets required to pay for their care, then reduce their tax/ni conts)

i don't know

[Mr.P]

But the seven year rule they're talking about I would think could be inheritance tax, I didn't think there was a time limit for deprivation of capital.

 

The mother would still have a beneficial interest in the house for as long as she remains there. As a consequence, HMRC and the local authority would see any transaction as a "gift with reservation". Depending on the value of her assets when she dies, the value of the property could mean the estate is liable for Inheritance Tax (I don't think the seven year rule would apply in this situation). The LA would also be keen to take action if the mother required care.

 

The OP should take qualified legal advice from an expert in this area. A conveyancing lawyer is unlikely to have the expertise, so I'd suggest a solicitor that is conversant with trust, inheritance tax, and estate planning. But do bear in mind, the rules could change, so a regular review would be essential.