Grandson to inherit house - implications of living in it in the meantime

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Azurerat

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Hi, my son has just been told he is being left a house in a will by his granny, who is now in a nursing home. She is giving him the keys and says he can have the house now as she will no longer be living in it. He is in college and would love to rent it, as he is in college in another city and needs to pay for his accommodation.


any tips/advice please
 
Is she signing over the house now or allowing him to stay there as caretaker?

Also has she availed of the Nursing Home Loan.
 
No, as far as I know she isn’t signing over, but has made a will, and yeah I suspect she is on fair deal.
 
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So the fair deal will have to be paid when your relative passes away.

In the meantime, I'd suggest a caretaker arrangement, grandson pays bills & maintains property.
 

The rules with regard to renting property under the Fair Deal scheme changed in February, 2024, see here.

It is very important that the house is not gifted over now as anything disposed of falls under the 5 year rule under Fair Deal scheme.

Transferred assets​

The assessment will look at assets that you have transferred (for example any land, money or property you have given to another person) since applying for State support or in the 5 years before the application.
 
Sue Ellen said:
The rules with regard to renting property under the Fair Deal scheme changed in February, 2024, see here.

It is very important that the house is not gifted over now as anything disposed of falls under the 5 year rule under Fair Deal scheme.
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Rules have also changed regarding selling. Previously if you sold while in a nursing home under Fair Deal the net proceeds would be assessed indefinitely. Now if you sell your home while in care, the net proceeds also qualify for the 3 year cap. From the same link you provided:

Your home
Your home will be removed from your financial assessment after you have been in care for 3 years. You do not need to do anything.
If you sell your home while you are in care, the net proceeds of sale will also qualify for the 3-year cap. You need to contact your local nursing homes support scheme office if you sell your home.
 
I don’t know how he can rent a house he does not own.

No doubt granny means well and presumably no longer expects to be paying for utilities, insurance, upkeep etc of the house, but in your son’s case, he is in college and paying for accommodation in a different city. It doesn't sound like he is in a position to unofficially take the house now. It would be better for him to inherit the house when granny passes, that way he then has the option to keep, sell or rent it.

As already suggested, a trusted family member or friend living there on a caretaker basis and paying bills is the way to go.
 
DannyBoyD said:
So the fair deal will have to be paid when your relative passes away.

In the meantime, I'd suggest a caretaker arrangement, grandson pays bills & maintains property.
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Thk u v much for advice, do u have any details on caretaker role?
 
One option to strongly consider is selling the house now.

I do not know all the facts to be able to say if this is the right option for the granny and your son (and family) but it should be in your consideration. She can still achieve her aim of helping out your son. Having to look after an empty house/garden for anything more than a few weeks is a significant undertaking, as is becoming a landlord if the granny rents it out and you/your son effectively acts as the middleman.

Also obvious question, but hopefully she has a clear will in place - this should be updated if there is a major change in asset ownership like the house being sold.
 
Don't see anything stopping him renting it out. This is what needs to be considered:

- the rent would surely belong to granny
- income tax would have to be paid by her
- he could rent it out and pay house insurance and repairs out of it
- the income from rent is -happily- no longer assessed for Fair Deal.

The Good News:

- Granny can gift her grandson 3K annually without any tax implications for either party.

The reason the Fair Deal was changed was to encourage houses left vacant while people spent years in nursing homes. This case is perfect for that. And your son will learn to manage property.

In addition, Granny ought to pay him for managing the property. It is an actual task. So I would suggest 10% of rent. He'll have to declare that as income, but presumably he'll be earning little to no other money and so no issues on that score either.

Be careful about pre letting expenses. Come back to us on that if you decide on this route.

The benefits

- property is minded
- income received
- grandson learns how to manage as a landlord
- he gets paid for so doing
- house insurance is paid out of rental income
- house is maintained to a good standard out of rent
- somebody gets housed
- he should also complete the income tax returns for granny.
 
Unwise to sell and upset granny if will is in place gifting son the house. She may no longer be capable of doing a will.

He will have income tax implications on the house. That could be a major tax headache involving sale of house to pay the tax.
 
Thats why I said I don't have all the facts and it should be an option for consideration.

She may not be at all upset, fully compos mentis and likely to live for a couple of years - the exact same thing happened to my Nan and she was happy for daughter to sell the house rather than leave it empty or become a reluctant landlord.

I wasn't saying it was the best option - merely pointing out that it should be on the list of options.
 
Bronte said:
Don't see anything stopping him renting it out .......................
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Granny could rent out the house. A lot of headaches there for the grandson who the house is willed to. He would have to administer the whole rental process. Being a Landlord dealing with tenants, the PRTB, tax returns for himself and granny is not for everyone, particularly a student attending college and living in another city.

Another worry would be when granny passes and tenants don't want to leave, especially concerning if there is a HSE loan involved that has to be repaid from the proceeds within a year to avoid interest penalties.

Renting might make sense on paper, I’m not sure it is worth it overall. There are a lot of advantages to the caretaker option.
 

Thank you for advice, totally agree re benefits and common sense of same, but legally for him to rent it (maybe via an agency ), what legal procedure would be best, in terms of minimising hassle to Granny and simplest/speediest in execution for all.
 
Azurerat said:
Thank you for advice, totally agree re benefits and common sense of same, but legally for him to rent it (maybe via an agency ), what legal procedure would be best, in terms of minimising hassle to Granny and simplest/speediest in execution for all.
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He just rents it out himself and tells Granny he is taking care of everything. As long as she is happy with this of course.
 
If rent is paid, then you end up in tax / receipts / paperwork.

Caretaker agreement is far simpler.
 
I don't know how old that student is but organising a first rental from another location and then managing it seems to me fairly unrealistic. I would think that the property might be old and if the owner has now moved to a nursing home, it might not have been taken care of properly for some months/years. Who is supposed to organise pre-rental clear out, cleaning, maintenance, check in terms of electrical..., furnishing and to ensure that it covers current regulations. By whom and how are these expenses paid? By Granny from the nursing home? Does she have the capacity to take these financial decisions? And then there is the relationship with the letting agency and/or tenants, repairs and paperwork. Finally the taxes to organise. When all that is taken care of, I would add the risks involved with a rental As Granny still owns the house, she will also be liable in case of any issue.
 
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