Downsizing Pitfalls

A gentleman who is over 60 is purchasing a property with his elderly mother. I believe that it cannot be taken by social services for care if needed in the future as her son is over 60? What would be the best way to hold the property on the deeds and are there any pitfalls to look out for in the future? I.e. deprivation of assets etc. His mother is a widow so IHT allowances should be within the taxable allowances but could there be any other taxes with this arrangement? Thank you

I assume son will use his own monies to contribute to the new purchase.

Mother will similarly use her own monies. She may either use all the monies from the sale of her own property to contribute to the new purchase or may use only a % of it (the latter case giving rise to “downsizing” for RNRB purposes).

Probably each should own the % which represents their respective contribution ie mother doesn’t effectively make any gift by way of a % in the property (or any surplus monies) to son (so as to avoid any argument re deprivation of assets on her part). Both names shown on legal title and beneficial interests held as tenants in common.

As each live in the property each entitled to CGT exemption on a future sale. Assume mother leaves her interest to son on her death (inter alia, this allows for a RNRB on her death). CGT uplift on mother’s death on her %. Alternatively, mother leaves her share on life interest for son on her death as this means on son’s death the life interest does not form part of his capital for care home purposes.

Para 4(2) of SI 2014/2672appears to support your view re a disregard as son is aged 60 or over.

Malcolm Finney

Thank you for this very informative reply it is really great.