Money for mortgage.gift from grandparents

Richyt

Hi all.please help.my grandparents want to give me 20k towards my house.how can they do this best without paying any charges (tax) so I don't get in trouble.we were thinking of having a loan like system where I agree to pay an annual fee to them.although this would be seen as dept I would of thought.thoughts would be appreciated.thankyou.

Yorkie1

You need to decide from the outset whether it is a loan (repayments as you suggest) or a gift as your title says.

If you declare it as a gift to a potential lender, when in fact you intend it to be a loan and thus repaid, is mortgage fraud because both you and your grandparents will be signing documents to the contrary.

Going back to the tax issue, the issues which might arise are:

1. Inheritance tax. If their assets are above £650K then there might be an IHT implication but don't worry about that.

2. Deprivation of assets. If they claim, or might in the foreseeable future, any means-tested benefits or care, then they will be treated as if they still have the money. You're not allowed to give away money and then rely on the state to help you out because of giving that money away.

That's really about it. They won't get into any tax trouble just by giving the money to you, and you won't get into any tax trouble by receiving it (e.g. income tax).

If you're only thinking of the repayments in order to avoid tax problems, then don't worry. If they are happy to give you the money outright, then all that they will be required to do is to sign a document saying it's a gift. Simples

amnblog

Yorkie1 wrote: »

there might be an IHT implication but don't worry about that.
/QUOTE]

Why not?

Yorkie1

amnblog wrote: »

Yorkie1 wrote: »

there might be an IHT implication but don't worry about that.
/QUOTE]

Why not?

Could have been better phrased. I meant that a £20K gift on an estate of £650K is unlikely to cause significant issues, particularly if the grandparents live long enough for it to be subject to tapering relief. And that it's unlikely to be an immediate concern.

getmore4less

Yorkie1 wrote: »

Could have been better phrased. I meant that a £20K gift on an estate of £650K is unlikely to cause significant issues, particularly if the grandparents live long enough for it to be subject to tapering relief. And that it's unlikely to be an immediate concern.

If the only gift in the last 7 years is the above there is NO taper relief.

amnblog

The IHT risk may be unlikely, but that won't stop the solicitor trying to sell them gift indemnity insurance.