14:11 PM, 22nd April 2014, About 8 years ago 10
My parents are selling up to move closer to family as they have health problems. My Mother has carers coming in at a cost of approx £600 per week. They will receive just over 460k from the sale of their house.
We now have 2 alternatives, and I would really appreciate your comments on them as I can’t believe I havn’t forgotten something!
Option 1: They buy an investment property I own which is ideal for them and they like for 350k. They are left with 100k.
Option 2: They move into my investment property without buying it and live there rent free. They give me 200k to clear my residential mortgage and buy another investment property from me for 200k and receive an income of £900 pcm. They are left with 60k.
It is my understanding that from 2016 care costs (but not accommodation costs) will be capped at 72k. They do have some other money to make up the shortfall. As I see it I have to make sure that 72k is available to pay this, but in the mean time option 2 provides additional income for Mum and Dad.
There will be greater potential for capital gains with option 1 but still some potential with option 2. My tenant in option 2 is a long termer wanting to stay forever and good with rent payments, in receipt of DLA and HB, looking after the house etc. I have replaced windows, put in a new kitchen and just replaced the boiler, so for see no major expenses coming up.
The 200k to me is basically inheriting early and when the time comes I would expect the investment property in option 2 to be left to my sister.
What have I forgotten?
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