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Help with Land Registry
A Wilks
Posted: 25 September 2013 11:42:46(UTC)
#1

Joined: 25/09/2013(UTC)
Posts: 3

Advise would be great here please
I intend to by my mothers house for the remainder of her Mortgage which is considerably lower than market value, I have contacted a solicitor who mentioned 'Gifting', the mortgage company will do change of name/ownership for deeds. Revenue and Customs do not need to be notified as the figure is below 40K
So my destiny lays in the hands of Land Registry, I have spoken to them re change of ownership which can be done under 'gifting', however no one can tell me about the 7 year rule, if I own the house, have the Deeds and Land Registry in my name, will I be exempt of care costs if anything should happen???
No one seems to be able to clarify this.

Alan Selwood
Posted: 25 September 2013 14:17:21(UTC)
#2

Joined: 17/12/2011(UTC)
Posts: 3,379

Bear in mind that for Inheritance Tax purposes, your mother will not 'lose' the house from her estate at any time in the future, if she continues to live in it (and thereby gets a benefit' from the house), UNLESS she sells it to you at a fair market price and then retains no right to live in it, and rents it from you on a purely commercial basis at the going rate. Check carefully on the IHT rules on this with HMRC and/or a qualified tax specialist who is skilled in the rules affecting IHT. Such a sale needs to be seen to be an 'arm's length' transaction, where there is no evidence of a pre-arranged plot to fiddle the system by doing anything more intricate than a 'no-strings-attached' sale.

As for trying to remove the house from her estate in case this protects it from future care fees, you need to play this very carefully. I suggest that you consult a specialist in the benefits system.
I would imagine that each case tends to get examined on its merits, with, for example, a fit 50 year old having little problem of disposing of his/her house, not normally seeming to be trying to deprive the system of the value of the house to cover the cost of care, while a frail 90 year old would immediately ring mental alarm bells!
In between is a grey area where records of multiple past similar cases and how the law was eventually applied to them may go some way to clarifying the expected outcome. But be prepared for argument over the interpretation of the rules in any individual case.
A Wilks
Posted: 25 September 2013 15:35:40(UTC)
#3

Joined: 25/09/2013(UTC)
Posts: 3

Thanks, inheritance tax isn't what we are trying to avoid, it's more where the land lies, (pardon the pun) for land registry, we arn't trying to avoid anything, I'm just getting contrasting views, the reasons for change of ownership are valid.
I was told that we can change name/ownwership of deeds with building society at point of Mortgage settlement and the land registry can stay in my mums name but she will still legally own the house, therefore I can't sell without permission, if she became ill or needed care the house would need to be sold to pay for her care.
By changing the Land Registry, it makes the house legally mine but due to the amount paid it has to be classed as 'gift', is it at this point the 7 year rule comes into play?
Alan Selwood
Posted: 25 September 2013 16:56:51(UTC)
#4

Joined: 17/12/2011(UTC)
Posts: 3,379

The following is a paragraph about IHT:
A gift during one's lifetime is usually (apart from minor annual exemptions, gifts in prospect of marriage, gifts to charity and certain political parties, etc) treated as a 'PET' (a Potentially Exempt Transfer). You need to survive 7 years from making the gift for the asset to escape IHT. However, if you retain an interest in possession (e.g. living rent-free in the house you gave away), the 7-year clock never starts ticking. Hence my comments about selling the house for a commercially acceptable market price.

The following thread (and the comments and caveats!) is useful re both IHT and care costs:
http://citywire.co.uk/mo...heritance-tax/a589586/3


A Wilks
Posted: 25 September 2013 20:32:35(UTC)
#5

Joined: 25/09/2013(UTC)
Posts: 3

I appreciate your comments and advice, IHT has nothing yo do with this
situation as the estate is no where near 235K
my mum won't be living in the house, I will, this post was a long shot
but wondered if anyone could shed any light...
Alan Selwood
Posted: 25 September 2013 21:13:07(UTC)
#6

Joined: 17/12/2011(UTC)
Posts: 3,379

For the care element, start with the link I gave you above, especially pages 2 and 3.
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