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money gift as a mortgage deposit

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I have been gifted £10,000 to use as a mortgage deposit. This is part of the mortgage deposit and the remainer will come out of my savings account.

Would it be best to have the money gift put into my savings account first or would it be best to have a cheque for that amount made out straight to the building society. I dont understand the system but am worried I may have to pay tax or something if it goes into my savings account first.

Comments

  • Aegis
    Aegis Posts: 5,695 Forumite
    Part of the Furniture 1,000 Posts Name Dropper
    babka wrote: »
    I have been gifted £10,000 to use as a mortgage deposit. This is part of the mortgage deposit and the remainer will come out of my savings account.

    Would it be best to have the money gift put into my savings account first or would it be best to have a cheque for that amount made out straight to the building society. I dont understand the system but am worried I may have to pay tax or something if it goes into my savings account first.
    Gifts are tax free on receipt. You only need to worry about paying tax if the donor dies within 7 years and had already made gifts exceeding the nil rate band of £325,000 before your own.

    In any case, it makes no difference either way: you have received the money whichever way you approach the matter, therefore if tax becomes due, it's payable either way.
    I am a Chartered Financial Planner
    Anything I say on the forum is for discussion purposes only and should not be construed as personal financial advice. It is vitally important to do your own research before acting on information gathered from any users on this forum.
  • atush
    atush Posts: 18,731 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Pay it into your acct.
  • babka
    babka Posts: 5 Forumite
    Would it be difficult for me to prove it was a gift if its paid straight into the building society. I presume the benefactor will have to declare this gift in his tax return?
  • xylophone
    xylophone Posts: 45,612 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    The donor will not need to declare it on his tax return but will wish to keep a record of it in case it should become relevant for IHT purposes.

    Perhaps he could write a letter to you on the lines of "Dear X, I enclose herewith a cheque drawn in your name for £10000 to assist you with the deposit on the house you are proposing to buy. I confirm that this is an outright gift from my own resources.

    He should then sign and date the letter and keep a copy with his will.

    In your position I would pay the cheque into a savings account and earn a little interest while waiting - this interest will of course be taxed in the normal way according to your tax situation.
  • babka
    babka Posts: 5 Forumite
    Many thanks to all who took the trouble to assist me, Im a lot wiser now.
  • You don't pay your deposit to the mortgage company, you wire it to your solicitor who then wires it to the seller's solicitor who then wires it to the seller. It's the seller's money.
  • Keeps things much clearer all round if the gifter gives the money to you by cheque (paper trail), you put it into your current or savings account for a bit and then YOU transfer it to whoever needs it. The money is then clearly coming from you.
  • kidmugsy
    kidmugsy Posts: 12,709 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Combo Breaker
    I agree with xylophone: invite the donor to write you a letter and keep a copy for himself. When I've given family gifts, I've also asked the donee to write back acknowledging the gift, and that plus a copy are stored too.
    Free the dunston one next time too.
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