House sale and gifting money to a child
Discussion
Hypothetical question.
My partner and I, our house is worth approx £500k. All children now living elsewhere with their families, only one adult child living at home - house is bigger than our needs.
Plan is to sell property and buy a bungalow, probably around £400k. Could i give the remaining money, approx £100k to my child who lives with me for them to buy their own property - its likely they will have to take out a mortgage, so i guess its a deposit from my partner and I to our child.
Any tax implications or issues with doing this?
My partner and I, our house is worth approx £500k. All children now living elsewhere with their families, only one adult child living at home - house is bigger than our needs.
Plan is to sell property and buy a bungalow, probably around £400k. Could i give the remaining money, approx £100k to my child who lives with me for them to buy their own property - its likely they will have to take out a mortgage, so i guess its a deposit from my partner and I to our child.
Any tax implications or issues with doing this?
I don't think so providing you don't cark it within 7 years. The amount will need to be declared by the borrower to the Lender, who will probably expect a letter from you confirming that the amount is a gift rather than a loan...
child may want a deed of trust relating to the 100k if they are buying with a significant other (or with any future significant other) to protect it in the event the relationship ends...
child may want a deed of trust relating to the 100k if they are buying with a significant other (or with any future significant other) to protect it in the event the relationship ends...
Terminator X said:
If you had a £100k deposit though why is it anyone else's business? Surely the mortgage company doesn't care as long as the loan to value works.
Extreme event - the OP could give the child £100k cash and they could use that to pay the first 10 years of payments etc.
TX.
Money laundering regulations and anti-fraud measures mean that the source of the £100k would have to be proved.Extreme event - the OP could give the child £100k cash and they could use that to pay the first 10 years of payments etc.
TX.
OP, this might be useful: https://www.samconveyancing.co.uk/news/conveyancin...
Family member recently did this, three things you must keep in mind.
If you are above the IHT threshold and you die within 7 years of the gift then there is tax payable on a sliding scale.
They must prove to the bank where the money came from.
You must write a letter to the lender saying you have no financial interest in the house, the money was a gift, you will not live there and you don't ever want the money back.
If you are above the IHT threshold and you die within 7 years of the gift then there is tax payable on a sliding scale.
They must prove to the bank where the money came from.
You must write a letter to the lender saying you have no financial interest in the house, the money was a gift, you will not live there and you don't ever want the money back.
BlackTails said:
JQ said:
Slightly off topic, but did each of the other children get £100,000 towards their first homes?
Intrusive and irrelevant. The OP doesn’t need to answer my question, but I do hope they’ve discussed the gift with all the siblings.
BlackTails said:
JQ said:
Slightly off topic, but did each of the other children get £100,000 towards their first homes?
Intrusive and irrelevant. If there is an IHT issue the Nil rate band would be used first - so the donors nil rate band would reduce by £100,000 to £225,000, until the gift drops out of the reckoning in seven years time. There is no tapering of relief for IHT as the gift is within the available nil rate band.
You could make it a joint gift and use your £3000 gift allowances x2 and if you haven’t used the previous years allowance carry this forward too, knocking £12,000 off the gift.
You could make it a joint gift and use your £3000 gift allowances x2 and if you haven’t used the previous years allowance carry this forward too, knocking £12,000 off the gift.
Richonenope said:
If there is an IHT issue the Nil rate band would be used first - so the donors nil rate band would reduce by £100,000 to £225,000, until the gift drops out of the reckoning in seven years time. There is no tapering of relief for IHT as the gift is within the available nil rate band.
You could make it a joint gift and use your £3000 gift allowances x2 and if you haven’t used the previous years allowance carry this forward too, knocking £12,000 off the gift.
Would it be more beneficial for me to give £50k, and for my partner to give £50k (total £100k) - rather than one of us, my self or my partner, give the full £100k.You could make it a joint gift and use your £3000 gift allowances x2 and if you haven’t used the previous years allowance carry this forward too, knocking £12,000 off the gift.
Alex Z said:
BlackTails said:
JQ said:
Slightly off topic, but did each of the other children get £100,000 towards their first homes?
Intrusive and irrelevant. psi310398 said:
Cheib said:
The beneficiary wouldn’t be subject to IHT it would be the OP’s estate ?
Yes, but generally the sum needs to be found sharpiish to pay any IHT owing. Terminator X said:
If you had a £100k deposit though why is it anyone else's business? Surely the mortgage company doesn't care as long as the loan to value works.
TX.
Having done something similar for my children in terms of a house deposit it is very much a question that the mortgage company will ask. TX.
My eldest got a mortgage with Nationwide who sent me a form to complete as did his Solicitor.
As already posted I had to declare no interest in the house , not a loan , just an unencumbered gift and where the money was coming from.
Gassing Station | Finance | Top of Page | What's New | My Stuff