If my elderly mother wished to buy an assisted living apartment using her savings and derive a rent from her house to pay for the maintenance costs and other expenses on the assisted living property, what would be the tax liability on both properties on an ongoing basis, and when she passes away, as I have to deal with he affairs.

Arthur Weller replies:
Even though your mother is using the rent from her old house to pay for the maintenance costs and other expenses on the assisted living property, nevertheless this rental income is subject to income tax in the same way as any other income. Since she owns both properties, when she passes away both properties will be included in her estate, for inheritance tax (IHT) purposes, but the residence nil rate band should be available to reduce the impact of IHT.