Home Purchase funded by parents - Tax Issues?

spankypanty

Hello everyone, I'm not very familiar with any restrictions to foreigners trying to purchase a property in the UK and I was hoping some of you may be able to help me out.

I'm not originally from the UK and my parents and I are looking to purchase a property in London. I am employed in the UK under a working Visa and the intention is to purchase a property under my name but fully funded by my parents.

As my parents do not reside in the UK, their intention is to have the funds (from sale of a business) directly transferred into my account here in the UK to be used to finance the purchase of a property.

Now the funds are fully net of tax in the country of origin (i.e. CGT and local taxes all fully deducted) but instead of actually being paid to the parents' account it would be directly paid into my account.

My question is: will I be liable for any tax when the funds are being transferred into my account?

I believe this is a bit confusing but essentially this will be like buying a property with a loan given to me by my parents BUT the money comes from someone else.

Any ideas?

pie81

From my limited knowledge, I don't think you should be liable for any taxes for a gift/loan of money from your parents.

Some other issues you are likely to face:

(1) your solicitor for the property purchase will need to ask some fairly detailed questions about the source of funds, to be sure it's not proceeds of crime.

(2) your mortgage company (IF you are getting a mortgage) will want to know whether the funds are being paid by your parents as a loan or as a gift. If a loan then they will want the parents to sign away any claim to the property.

spankypanty

Thanks for that. So basically I can show that the money is only temporarily within my account solely to fund the purchase of the property there wouldn't be an issue?

It would be alright to prove that the funds are legitimate, as they will be fully documented. Thing is, does the fund have to come direct from my parents' accounts?

pie81

I think (but don't rely on this!) that as long as you can prove to the taxman that it's a gift from your parents then there should be no issue. that doesn't mean it needs to come from your parents' account but you would need to explain why it's coming from elsewhere.