Gift Deposit from Grandparents

hanskib18

Hi,

I am currently being bought out of my current mortgage by my ex partner and am therefore looking for a new house for myself. My Gandparents have offered to pay my deposit for me and I am trying to work out the best way of doig this.

I'm aware that gifted money over 3000 is taxable if the giver dies within 7 years, but assuming that this does not happen, where do I stand? Is it best for them to pay the money out of their account, or to transfer it to me so that as far as my mortgage provider is concerned, it's come out of my bank? Also, we need to discuss whether or not they would want the money, or a percentage of any future sale of the house - in which case if we drew up some sort of contract to cover that, would 'their' part in my house become part of their estate?

Any advice would be great as trying to figure this out on my own whilst also searching for a house I feel safe in on my own is really stressfull!

Many thanks

Robert_Sterling_3

hanskib18 wrote: »

I'm aware that gifted money over 3000 is taxable if the giver dies within 7 years, but assuming that this does not happen, where do I stand?

There is a nil rate band for Inheritance tax.
For a married couple it exceeds £600,000.

I will not go into further details as you can google it up.

They can each give you £3,000 per year. Total £6,000
per year.

But they can give you more or less what they like unless we are talking £100,000s

CLAPTON

If you grandparents estate is likely to be greater than 624,000 and they both die then IH tax may be payable.

If they give some away and then both die within 7 years then the gift is 'added' back to the estate and IH tax may be payable from the estate.
All things being equal the total amount of IHT will be the same in both scenerios.
The tax is paid from the estate and is not your personal responsibility unless their will says differently.

If they can hold out until/if the Conservatives get into power, then the IHT allowance will rise to £2m.

Some gifts are exempt anyway... e.g. each can give you £3k per year without IHT being a factor... so they could give you 6K now and then another 6k after 6th April. .. you need to check out the full rules if you want to do this.

It's helpful if you said what sort of money are you talking about here.

It's probably best if they pay you the money so its in your own accounts.

Whether they want a share of any eventual profit is something you need to discuss with them.
If its a formal documented agreement then potentially the value may form part of their estate should they die.
However, there are ways of getting round this.
Best discuss this with them before getting too stressed about this.

sloughflint

CLAPTON wrote: »

so they could give you 6K now and then another 6k after 6th April. .. you need to check out the full rules if you want to do this.

Actually Clapton if they are proposing to gift rather than lend, they could gift 12k now ( 6k each) and 6k after April ( 3k each) without IHT consequences assuming if they did not use last year's gift from capital allowance.

Robert_Sterling_3

If they have not used the £3,000 exemptions for 2007-2008 then they can give £6,000 each now and a further £3,000 each in late April. Total £18,000. :j

CLAPTON

sloughflint wrote: »

Actually Clapton if they are proposing to gift rather than lend, they could gift 12k now ( 6k each) and 6k after April ( 3k each) without IHT consequences assuming if they did not use last year's gift from capital allowance.

excellent point

Robert_Sterling_3

Am I missing something here? I thought that was what I had said.;)

hanskib18

Thanks for your advice everyone. Basically, my grandparents are giving me 40,000 and I'm budgeting to buy for 75-100,00, so essentially I'd have no more than a 60% mortgage.

jiggy2

would gifts with reservation rules apply if the "gift" is given in return for getting a share of the house?