I've accepted an offer on my mum's house - she doesn't want to sell, but that's another story... To protect her money, I suppose I will have to spread the proceeds amongst various banks/building societies to use the £75k protected limit, so will I have to set up new accounts in her name. As if things aren't complicated and stressful enough! I have a financial LPA, but as the accounts are in her name, and she now lives in a CH, does that cause issues? Has anyone had to do this, and have any advice? X
Proceeds from my mum's property
- Thread starter daughterofpat
- Start date
Hi, the limit per bank is now £1 million but only for 6 months.
I would suggest speaking to an independent financial adviser about the best way to invest the proceeds in the longer term but this new higher limit means you haven't got to mess about in the short term.
Hope this helps.
Lulabelle
I would suggest speaking to an independent financial adviser about the best way to invest the proceeds in the longer term but this new higher limit means you haven't got to mess about in the short term.
Hope this helps.
Lulabelle
As long as your LPA is registered,,it shouldn't make any difference that your mother is in a care home. You are her representative.
Also be aware if she's been in a NH for a while, 3 yrs I think, you may have to pay capital gains on the house. The difference between what it was worth when she bought it and what she's now got for it.
I wish I'd known about this clause before, as Mum's been in her Home 4 and a half years now and so it now counts as an asset as opposed to her 'home'.
I do sympathise, as once the house is sold the loss of rental income and low interests these days mean their money runs out even faster.
Oh goodness- had no idea about this ! This will affect quite a few self funders I think - a friend'relative is in this position - ie self funding for a few years and now having to sell house. This seems very unfair.
If the house was unoccupied the time limit is 18 months, it used to be 3 years.
The capital gain is time apportioned over the period it was owned and it is only for the last unoccupied period that the gain is chargeable.
So difference between purchase price and sale price divided by number of months from date of purchase to date of sale, gives you the gain per month. Then if it was 4.5 years after moved into home, then 36 months of the gain per month is the chargeable gain. There is then an annual exemption to deduct as well of £11,000 - so if the 36 months time the gain is less than £11,000 then there is no tax.
I should add the example is very simplistic, and if part of the house was inherited from the spouse the cgt calculation will be much more complicated as it is in my mum's case. Her half of the house was purchased in 67 but dad's half of the house became hers when he died in 94 and is valued at house prices on that date (so lower gain in total but complex calc).
If the person whose house it is does not prepare a self assessment return, then you will need to notify HMRC they fall into self assessment for the relevant year so that returns are issued. There are time limits on this as well.
HMRC also receive all listings of house sales from the land registry, and match them to the council tax register. If there is no one resident they start a tax enquiry and a minimum penalty of 20% of the tax is likely to be charged so please don't consider not advising of sale. I see several people caught this way each year.
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Never heard of capital gains being applicable in this scenario. Do check with someone that knows for sure
Surely it no different to purchasing somewhere else to live (Ie deciding to sell up and 'rent' which is essentially what will happen. Rent= Nursing home bed)
Surely it no different to purchasing somewhere else to live (Ie deciding to sell up and 'rent' which is essentially what will happen. Rent= Nursing home bed)
I can assure you I have detailed knowledge of this area.
All house sales are subject to capital gains tax, but if you sell one you live in you receive a principle private residence exemption (PPR) - the day you move out the house is no longer you PPR so the exemption no longer applies.
https://www.gov.uk/tax-sell-home
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That's interesting JM. Does that apply similarly when a house is left as an inheritance?
Nothing to do with a nursing home I hasten to add, just wondering about the future.
Nothing to do with a nursing home I hasten to add, just wondering about the future.
No capital gains tax applies on death, inheritance tax applies instead on the total value of the deceased assets.
Unless a property passes to a spouse/civil partner, it forms part of the estate for inheritance tax purposes.
Unless a property passes to a spouse/civil partner, it forms part of the estate for inheritance tax purposes.
"Does that apply similarly when a house is left as an inheritance?"
For info
An additional nil rate band for properties passed to a direct descendent is being introduced in 2017
https://www.gov.uk/government/publi...-nil-rate-band-and-the-existing-nil-rate-band
For info
An additional nil rate band for properties passed to a direct descendent is being introduced in 2017
https://www.gov.uk/government/publi...-nil-rate-band-and-the-existing-nil-rate-band
Thanks for the info Jugglingmum. My mum will have only been in the NH for 8 months, but good to know. We were considering renting, but the finances didn't stack up, and now glad they didn't as we would have had to pay capital gains. How unfair that someone who works all their life, and contributes to a good pension, not only has to pay all NH costs, but may also have to pay capital gains!
Once the house has been moved out of it is seen as in an investment asset, if the house is sold and used to buy shares, capital gains will be payable on these if sold, so same thing really.
Note this only applies to sales post JUly 15, I sold mum's house in June 16 but she will be able to benefit as post July 15 even though only comes in for deaths post April 17 (assuming she lives post April 17).
Another IHT point many miss is that if a deceased spouse did not use their IHT nil rate band it passes to the surviving spouse, at the rate it was at their date of death.
I would strongly advise anyone dealing with an estate above the Nil rate band to take professional advice as this area is complicated.
Thanks JM. That confirms what I had thought. I will have my husband's allowance as well which will make it below the capital gains tax threshold unless the house's value suddenly increases madly!
My Dad has been in a care home for 26 months and I sold his house in May this year. I have opened up 6 different accounts to 'park' his money and endeavouring to get the best rates possible at the time as is my duty as attorney and keeping in mind the £75K protection limit. I have POA finances and I have found every institution to be helpful and accepted without any problem the POA and supporting ID documents etc.The accounts are set up in my dad's name with my name on the records as being able to action the accounts.
Just looking at the Gov Uk HRMC manual for CGT..whilst in 2014 the time exemption allowance was reduced from 36 months to 18 months, there appears to be a continuing exemption or PPR for sale of property by a person disabled or in long term care which remains at 36 months It does seem most unfair that a sale of a property in the circumstances of someone going into care and probably needing the proceeds to fund that care that they may be charged CGT if house prices have risen between entering care and sale of home.
Just looking at the Gov Uk HRMC manual for CGT..whilst in 2014 the time exemption allowance was reduced from 36 months to 18 months, there appears to be a continuing exemption or PPR for sale of property by a person disabled or in long term care which remains at 36 months It does seem most unfair that a sale of a property in the circumstances of someone going into care and probably needing the proceeds to fund that care that they may be charged CGT if house prices have risen between entering care and sale of home.
I will have to go down the multiple accounts route too, so good to hear all the banks were helpful! Did you speak to them before the money came in, or have all the money put into one account, then looked around for bonds etc to maximise interest?
I moved his isa to a better one then topped it up. Did a mixture of 1 and 2 yr fixed bonds, an easy access a.c. to top up his current a.c. to cover care home fees...he has a decent pension every month, he pays tax so put max in premium bonds. All the house sale proceeds went into his bank savings a.c. and then I just popped into each high street institution starting with building societies although few around where we are as they offered the best rates and then worked my way through. I am not a bacs transfer kind of person especially with someone else's money so I transferred each amount for each new ac one at a time let that clear as didn't want to hold too much at any time in his current a.c. then visited the next institution and repeated the process. It is time consuming but I know I haven't risked any of his money and although rates not great these days it is earning the best I could find.Most visits took around 30/45 mins as they have to photocopy all evidence for residency and money laundering purposes plus poa but all very efficient. I didn't want to set up online ac's but understand some banks or building societies won't handle poa new savings accounts online so were limiting anyway. The websites will tell you what you need to take in with you. Only one institution needed me to make an appt.
Thank you Love.dad.but. I've been told that as my mum is in a CH, I will need to get the CH to write a letter saying she lives there (as usual proof of address, bills etc won't apply). I assume everything needs to be in her name?
