Gifts & tax

Tom2023

Am I correct in thinking I can give my partner the money to buy her council flat and there will be no tax to pay other than some inheritance tax should I die in the next 7 years?

uknick

Tom2023 wrote: »

Am I correct in thinking I can give my partner the money to buy her council flat and there will be no tax to pay other than some inheritance tax should I die in the next 7 years?

If it is a true gift for her alone to buy the flat, i.e. you will never be put onto the flat's deeds as part owner, yes (but only if your estate, including pertinent gifts, will be liable for IHT at the time of your death).

However, if there is a chance you may be part owner of the flat at some time, there may be other tax issues, i.e. possible CGT liability when it is sold.

Tom2023

I think she can always gift me the money back as a share of the property.

zygurat789

Tom2023 wrote: »

Am I correct in thinking I can give my partner the money to buy her council flat and there will be no tax to pay other than some inheritance tax should I die in the next 7 years?

There may be no IHT to pay anyway.

uknick

If she does put you on the deeds, then there will be a CGT issue if it has never been your main residence when/if you sell it.

(If you're au fait with CGT I apologise for teaching you about eggs and all that.)

However, if you mean she'll buy it with your help, sell it and give you a portion of the proceeds, I can't see any tax implications other than possible IHT as you've already identified.

But, if you were to make her a loan (repayable upon sale of flat, or however you wish to word it) to buy the flat this would not incur any IHT liability as the money would still be shown as an asset included in your estate. This may also protect your money, if heaven forbid, things go sour in your relationship.

If you go down this route you I suggest you get some professional advice how to best draft a loan agreement.

SeniorSam

Any gift between spouses is completly free of any tax and does not count as a gift as far as inheritance tax is concerned.

The assumptions of you becoming a part owner later on does not come into your question. So gifting to your wife = free from ANY taxation

uknick

SeniorSam wrote: »

Any gift between spouses is completly free of any tax and does not count as a gift as far as inheritance tax is concerned.

The assumptions of you becoming a part owner later on does not come into your question. So gifting to your wife = free from ANY taxation

It's his partner, not wife. At least that's what he said originally.

audigex

Yeah he said partner so I'd generally assume they aren't married (particularly if she's looking to buy "her" flat, ie they aren't living together)

Either way I don't believe there's tax to be paid on any gift to anybody, if you're under the IHT threshold. Problems would only arise if you're above the IHT threshold, or if you take a stake in the property or charge interest on a loan.

getmore4less

If she buys the place with your money and you live there, a gift with reservations not a PET.

Tom2023

Thanks for all the advice.

I stay there but I have my own place which is my home.

The form from the Housing association asks how she intends to pay for the flat by mortgage or by cash. The cash options are;

Cash Purchase through own savings

or

Cash purchase funded by a gift, please provide additional details

or

Cash purchase funded via inheritance. Please provide details.

I'm not sure which she should choose. I am gifting her the money but the cash will be in her name and come from her account.

zygurat789

Tom2023 wrote: »

Thanks for all the advice.

I stay there but I have my own place which is my home.

The form from the Housing association asks how she intends to pay for the flat by mortgage or by cash. The cash options are;

Cash Purchase through own savings

or

Cash purchase funded by a gift, please provide additional details

or

Cash purchase funded via inheritance. Please provide details.

I'm not sure which she should choose. I am gifting her the money but the cash will be in her name and come from her account.

Surely it's no business of their's