Buying a joint home with Parents

by **CovertMark** on Sat Jul 16, 2011 12:30 pm

We are currently considering selling two houses (ours, and my parents-in-law) to be able to get a larger property ideally with an annexe (which would be more suitable for my father-in-law as he has trouble with stairs), and more room for our 3 small children. My wife is an only child so hopefully this will make this easier. I am struggling to work out the best way to do this as we are worried that at a later date we may be forced to sell in order to cover inheritance tax / care costs / capital gains (if this applies) and uproot our children. Also I wonder if having an annexe gives more options (i.e. we could seperate into two properties), or just a larger house makes any difference.

Any suggestions on how to minimize these costs would be really appreciated.

Thanks

by **Lee Young** on Sat Jul 16, 2011 4:37 pm

CGT - there shouldnt be any because any later disposal will be covered by the main residence exemption.

IHT - the arrangement will not chnage anything. The parents will own a proportionate share of the property. If hey give this away, but carry on living in the property, the arrangement should fall within the s102B exclusions and after 7 years some IHT savings wil arise.

Care - if they go into care and the remainder of their assets are in excess of the threshhold, then they will still have to pay for their care. The property could be disregarded if it is occupied by a relative over the age of 60, or occupied by a former carer. Either could well be the case by the time the issue arises. Alternatively if they give it away provided the reason they do this is not to enhance their rights to benefits then it should be disregarded, though the local authority can go back as far as it wants.

by **CovertMark** on Sat Jul 16, 2011 6:49 pm

Thanks Lee - we really appreciate your quick reply to our post

From your responses, it looks as if this is not quite the tax nightmare we had imagined. For the care perspective, both parents in law are over 60 so that looks okay.

For IHT (which will come into play due to the sums of money involved), I assume gifting over a significant amount at purchase (and thus reducing my parents-in-law's % ownership) and resulting in a smaller estate would be the best way to go on this (taking into account the 7 year rule)?

Thanks