Section 117 - selling house

[swhite56]

hi,

My father in law is moving into a care home under section 117 and has dementia. We have POA, he owns 50% of the house, the rest is shared equally by the children. We are after advice on what we should do with the house as it’s currently empty. Should we sell and keep half in a trust or should we rent the property? It needs a bit of money spending on it to get it into a rentable position.

We don’t expect the section 117 to be lifted in the future but I guess there’s a small chance it could be.

Are there any gotchas of selling the house?

Thanks

 

[allchange]

I do not think that there is a clear cut answer. You must act in your father's best interests but I think that is a matter of judgement here. You would not have to put the proceeds in trust as far as I know. Just handle the proceeds as you would the rest of his financial assets

Here is a link to a recent post I made re capital gains tax and inheritance tax, post number 4, https://forum.alzheimers.org.uk/threads/to-sell-house-or-rent-it-out.111834/#post-1577809
Bear in mind you and your siblings could possibly be liable to some CGT, and if any share is worth over 40k it could make the holder liable to an extra 3% stamp duty on any future property purchases.

Just to add, if any of the co-owners want to realise their share of the house it would have to be sold anyway.

 

[swhite56]

Thanks for the swift response. The house is valued at £250k and they have lived there for over 20 years. The 50% share is split 5 ways, approx £25k each.

So the house could be sold and the 50% share for my father-in-law kept in a bank account while he is in care.

 

[jugglingmum]

You don't make clear how the children share the ownership of the house. I presume it passed to them on the death of mother in law. It is likely her will specified a life interest for father in law, however sometimes the will specifices until the person with the right to occupy goes into full time care. This needs to be checked.

If father in law has a life time interest, the 50% of the house he doesn't own outright are in a 'lifetime trust' and he is likely to benefit from any interest, or investment funds arising from the proceeds of sale. Not an area I am familiar with on a day to day basis but I think by an odd quirk of tax law they also form part of his estate for inheritance tax purposes.

Father in law will not be liable to cgt as the house is his principal private residence (PPR). If a trust exists it is likely no cgt will be due as the trust is also entitled to PPR based on the occupancy of the lifetime tennant.

The will of mother in law needs to be referred to initially to determine the nature of the trust which exists.