Selling mum's house v renting it out

[surfer]

My mum is about to go into a care home near where I live. While she has savings and pension that will cover a year or so's care home fees, I will have to use her house 75 miles away as an asset to continue paying them. I have POA. I'm mulling should I sell or rent mum's house?

The obvious pros of selling are:
- lump sum in the bank, that can be drawn on for fees
- simpler once its done
Cons:
- capital gains tax due?- deciding what to do with the capital

Pros of renting it out:
- won't depreciate her assets as quickly - subsidising her care home fees

Cons of renting out:
- income tax liable on income
- hassle

Has anyone already been through this and got any advice to help?
What would you have done differently?
Thanks very much.

 

[DeeCee7]

Hello @surfer we had a similar issue with our friend for whom we have LPA for property and finance. We worked out that even with his savings, pensions and AA the additional rental income would only work for a couple of years and then we would have to sell anyway.
Rental income looks attractive, but if you then deduct full management fees, insurance, and the deduction of income tax, it wasn’t really that much and this was for a 3 bed semi. We were also worried about any potential issues regarding tenants, damage, costs of repairs etc. To be honest, I just couldn’t face all the extra worry ( and I am a worrier!) so it’s on the market and now under offer to first time buyers, so fingers crossed it should be a reasonably smooth process. The next issue is where to invest, but I have read good advice on here for that.
The only concern for me has been the decision to not tell our friend as it would just upset him and he would constantly forget about it. He’s never asked, apart from the occasional talk about going home. My sister asked me what his reaction was when we told him it’s being sold and the look on her face when I said we haven’t told him! I actually wouldn’t wish being a LPA on anyone, it’s an awful ( if necessary) responsibility.

 

[Female1952]

Hello @surfer.
My PWD went into a care home and I emptied the house and completed a sale within 3 months. That was 7 years ago and my PWD continues to be well cared for in the home. I would have had to sell her house before now even if I'd rented it out at first.

 

[Kevinl]

Sell, it's a no brained for me. Sold house requires no management, no maintenance as a landlord, just sell.
If you have an attachment as your childhood home probably that makes,it harder I appreciate.that been our family home for nearly 40 years, sell and have done is my vote. K

 

[sdmhred]

We’ve done a bit of renting - we rent to refugees via the Local Authority.

I don’t find it too much hassle but I was used to my Dad doing it so had picked up how he did things etc.

I think selling probably easier tho unless you want to hang onto the house for other reasons….if you rented how long would that sustain the fees for? You wouldn’t want to rent it out only to have to sell a few months down the line…

 

[Carmenjane]

Capital gains tax won’t be due as it was your mother‘s home

 

[Toopie28]

Oh this is interesting - this is exactly what I am in the middle of now.

I spoke to a financial advisor who ended up advising me to rent.

A lot of this resonates though - for me -
1. To help pay for the top up fees at Ma's carehome
2. To help pay for ME to come over from the US as often as I have been doing.
3. I don't know how much longer Ma is going to live and how much longer I need to do this trip
4. There is an attachment but I suppose I need a back up incase the home doesn't work out?
5. I wouldn't get the same return if I invested that I would with renting (also taking into consideration management fees and so on).

Eventually though, I will sell.

 

[Sphynx]

We decided to rent my Mums home. It has been a lot easier than I expected (I had the same worries as you). We have had no issues with tenants, no difficulties with the management company and are just about managing to keep paying care home fees.

 

[Kevinl]

As the holder of PoA coming over to visit might be seen as you benefiting, just be careful. K

 

[donkeygirl]

Big decision but I sold mums house.
Still feel the guilt but it would have to be done at some point and you have enough worries without that on top.
This disease is awful and I find changes every week. Being a worrier I couldnt cope with the extra stress.

 

[surfer]

Thank you, these are all very useful replies. Yesterday, I spoke to a friend who is a tax accountant and he advised to wait a few months. He confirmed CGT would not be an issue if I sold and given the length of my mum's residence there (since 1969), it wouldn't be a significant issue if I rent it out. My mum will have to pay income tax on the rental income though (which I will have to organise). I will probably approach local estate agents and ask for sales and letting valuations and what alterations would be needed if renting (all the grab rails removed!).

 

[Melles Belles]

@surfer
i would be cautious about renting out the house. These days being a landlord is quite onerous and many landlords are selling as it isn’t worth their while continuing.
you have to have gas safety checks done yearly, in some areas you have to have a license to let any type of property, you may have to have electrical checks and wired in smoke detectors.
Many tax breaks have been removed, and someone will have to organise your mum’s self assessment etc.
Please talk to a few letting agents and maybe an accountant before 6ou proceed.
Selling is the most straightforward option.

 

[sdmhred]

Yes you will need
gas safety check
electrical check
wired in smoke alarms

for us tho the most hassle has been finding tradespeople for small jobs such as plumbing, handyperson type jobs. Now we have those it’s been much easier.

we don’t use a management company tho as they’re a rip off in my opinion!

 

[Bod]

Adding to these lists of Landlord requirements, there is the "Right to Rent" legislation. Your tenant has to have the legal right to live in the UK, your responablity to check with the Home Office.

Bod