Gifted deposits

Gary123456790

Hi All,

I am purchasing a new property and selling my current one. Part of the deposit for the new property is coming from the father-in-law as a gift.

The lender is happy with this but I have heard that there are limits to the amount of money one person can give to another?

The father-in-law may put the money in trust which I believe basically means that if myself and the Mrs were ever to go separate ways then she'd get that money back. I don't know if a trust arrangement has a bearing on how much can be gifted?

I'm guessing the risk here is with Inheritance Tax?

Thanks,

Gary.

holly_hobby

He can't place the actual monies in trust - as the capital is provided to your conveyencer as part of the purchase process, which in turn goes to the vendor.

He could effect a trust deed, which basically states that upon sale of the property and relationship breakdown, x amount is to apportioned to your partner.

There is no official max amount as to how much can be gifted from a lenders point of view, its the relationship (ie immediate family) and the fact that the gift is to be made without any reservation or requirement of repayment, that is the crux for their acceptance (to which your FIL will have to sign a disclaimer confirming that the monies are a true gift without reservation).

Your solicitor may require an indemnity policy re the gift, this is in relation to the donor later being made bankrupt and the trustee in bankruptcy claiming rights to the capital for the benefit of creditors.

From an IHT point of view, the gift is classed as a PET (potentially exempt transfer) for 7 yrs post donation - after which time is is exempt from IHT assessment.

This would be relevant if FILs net estate on death exceeds the nil rate threshold 325k per person for 2013/14. (upto 650k if there is any unused deceased spousal relief available for transfer)

Hope this helps

Holly

Gary123456790

Many thanks Holly.