A friend wishes to gift her son a property which she has previously lived in. The son lives in it now after she moved out and she has moved out to another property with her partner. Its a bit of a sad situation as she has been ill, but expects to live 7 years - but maybe not much longer due to serious illness. She doesn't want to sell the house and the son is happy to take it on as it is - it also needs work.
The house would be put into the son's name mainly so he doesn't have to get a mortgage, have somewhere to live, and there are no ties or recall on any monies in the future - the house is his. But the idea is that the son would pay the mother a monthly amount say £500 to help her with her own bills as she can't work full time anymore. Basically she is preparing for her early demise , it seems, but needs some money whilst she is still here.
Is the £500 taxable as an income for any reason ? or where would it fall with regards to tax? It's not rent as she would no longer own the house and not a trust.
The £500 per month would come out of his normal earned income.
And I would expect the value of the transfer to be included in IHT before the 7 years are up, but are there any other taxes or pitfalls to be aware of.
The SDLT would be paid on the transfer as it would go through solicitors, fees, etc. And yes when the time comes, I will direct them to a specific tax accountant but just wondered what initial thoughts were on this .
Edit - I have not given any advice on the matter as she is a 'friend' and would not act for her.