Buying the family home with siblings

My wife and I are thinking about buying my wifes mothers house from her. She is going into aged care and needs a lump sum. We are thinking of buying it in conjuction with other members of her family. We will live there as our primary home and pay rent to the other members of the family. Bar the inherent danger in mixing business and family, can anyone tell me the implications/pitfalls of doing this with regards to 1st time home owners grant, capital gains, anything would be useful. Also does anyone know where I could go for more info. Thanks.
 
Hi,
You should contact centrelinks seniors advice hotline as well. There are some major potential implications for your mother in law, in how they assess her pension/ costs for aged care. So, that would be the first thing I would be clarifying.
One other option is that the accommodation bond may not need to be paid up front. You can just pay the interest and administration fee, on top of the daily care fees.
Depending upon the interest rates, and the family home, this may be quite an attractive option, and its what we are doing with our mum. The rental income you can get on the family home is not included in income testing for pensions/ care rates.
So, in our situation, it means mum has regular income coming in and we havent had to sell her home.
cheers
Pen
 
Hi,
You should contact centrelinks seniors advice hotline as well. There are some major potential implications for your mother in law, in how they assess her pension/ costs for aged care. So, that would be the first thing I would be clarifying.
One other option is that the accommodation bond may not need to be paid up front. You can just pay the interest and administration fee, on top of the daily care fees.
Depending upon the interest rates, and the family home, this may be quite an attractive option, and its what we are doing with our mum. The rental income you can get on the family home is not included in income testing for pensions/ care rates.
So, in our situation, it means mum has regular income coming in and we havent had to sell her home.
cheers
Pen

All excellent points that need consideration.

If your mum recieves a lump sum depending on the amount, she'll have to pay the nursing home upfront (why, if you don't have to?) and possibly have an amount left that affects her pension.

If she gifts any it can also affect her pension.

There are then the siblings to consider.

Far simpler imo, to just rent out the house and have these funds go to the nursing home.
 
When you enter into a nursing home there is an accommodation bond that generally needs to be paid if you have net assets over a certain amount (I think its circa $90,000). That bond can be any amount they like and it generally increases as the level of care increases.

You generally have the choice to pay the large bond or the equivalent amount of interest they would earn on that bond at an inflated price.

Most elderly people don’t have much assets outside of their home to pay this bond, so they are generally forced to sell their home. As the aged pension generally isn't enough to cover the equivalent bond payments and the weekly accommodation charges.

Buying the house off your mother doesn't do anything in terms of the gifting rules that centrelink apply, that would only occur if she turned around and gave you all the money back.

If you were to move in that would be your principal place of residence and capital gains tax should apply. But it would for your other family members when they sell.

in terms of the FHOBG I can't remember the rules when buying in as part of a larger group. but you might be able to swing it.

I'd be more concerned with the dynamics of investing with your family. it sounds like a great deal for you, but for them I'd be a bit concerned. The question I'd ask is, if they need to sell their share will you have enough money to buy it?
 
When you enter into a nursing home there is an accommodation bond that generally needs to be paid if you have net assets over a certain amount (I think its circa $90,000). That bond can be any amount they like and it generally increases as the level of care increases.

You generally have the choice to pay the large bond or the equivalent amount of interest they would earn on that bond at an inflated price.

The accommodation bond isn't necessarily related to the level of care provided. Its more likely to be charged in low care or hostel accommodation. ALthough high care with "extra services' will also charge (extra services are more lifestyle choices than related to care needs). the level of the bond will usually relate more to how new the hostel is rather than the level of care received. High care nursing homes generally charge an accommodation charge, on a regular basis, rather than a bond.

http://www.agedcareconnect.com.au/understandingfinancials.php

The equivalent interest amount isn't an inflated price. The amount paid (both the interest rate and the "residual" amount) is set by the govt. Whatever interest rate applies when you enter care is applicable for the life of that bond. So, if you happen to enter when the interest rate is high, you will pay that higher rate for the full time and vice versa. In our case, the bond interest rate is lower than the applicable bank mortgage rates now.

Pen
 
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