Cash gift from wifes grandparent

neil3k

Hello,

We're buying a property with the aid of a cash gift from my wifes grandfather. This is going to be £14,000 contributing to the deposit.

Will we have to pay any inheritance tax on this? And can he pay the solicitor directly rather than give it to us?

CLAPTON

potentially the gift will form part of their estate for IHT purposes if they die within 7 years... presuming of course their estate (plus the gifts) will be more than the IHT allowance
the tax is usually paid from the estate rather than you unless the will says otherwise.

le_loup

As CLAPTON said. Regarding the solicitor receiving the money direct, it would be better, to avoid Money Laundering questions, if all the cash came from you.

kidmugsy

Hold on.
(1) He can gift capital of up to £3000 pa exempt from IHT. So if he hasn't gifted any other capital this tax year, he could gift that to your wife free of IHT risk.
(2) He can also carry forward £3000 from last tax year if he hadn't already used that.
(3) He can also gift up to £250 p.a. to anyone else, e.g. you.

So there's (potentially) £6250 exempt.

If his wife survives, he can gift her as much as he likes free of IHT. For example he could gift her £6250 and then she could gift it to you both in just the same way. So now you've reached (potentially) £12500. The remaining £1500 is a potentially exempt transfer i.e. you hope that he survives for at least a further 7 years - as you doubtless hope anyway.

It would be wise to document these gifts with letters, copies being stored by the relevant parties.

ceeforcat

Or hold back a few thousand until the new tax year and the whole amount will be exempt.