How long to keep a gift not to be considered as deposit gift

idkwhattosay

Hi, pardon my ignorance but can you tell how long does a gift need to be in my bank account not to be considered a gift anymore, but my money instead?

My parents want to give me £8k because they sold some land, but it's not a deposit gift. They're just giving me and my sister the money. If I was to buy a property tomorrow that would probably be considered a deposit gift even though it's not. How long do I have to keep the money in my bank account so it's not considered that anymore?

AnotherJoe

You just need a signed letter from them stating its a gift.

kingstreet

No definitive answer.

If your solicitor (for example) asks to see build up of your deposit over the last twelve months, then effectively it remains a gift for upto twelve months until the credit into your account falls off your bank statements.

No way of knowing what your chosen solicitor will ask for...

HappyMJ

idkwhattosay wrote: »

Hi, pardon my ignorance but can you tell how long does a gift need to be in my bank account not to be considered a gift anymore, but my money instead?

My parents want to give me £8k because they sold some land, but it's not a deposit gift. They're just giving me and my sister the money. If I was to buy a property tomorrow that would probably be considered a deposit gift even though it's not. How long do I have to keep the money in my bank account so it's not considered that anymore?

Spend the money that was given to you and save all of your salary. That money will then become savings.

saverbuyer

From OPs other thread

idkwhattosay wrote: »

Well someone could always withdraw the loan money, give it the their parents and let them send the money back as a gift later when needed and sign the legal papers stating it's a gift and that they have no interest in the property whatsoever. As long as the loan has been withdrawn from the bank account is what counts I assume, what you do with the cash shouldn't concern anyone as that can't be traced or proven. That's the conclusion I've reached after browsing online. The only question is loan+lower mortgage or no loan+higher mortgage.

Are your parents actually gifting you money from a land sale?

kingstreet

A helluva lot of palava just to avoid a simple gifted deposit letter?

idkwhattosay

@saverbuyer: That's not related to what I'm asking here. I paid off my loan, I am debt free. I know what it looks like but it's not like that at all. It's not a deposit gift! It would be a deposit gift should I decide to buy right now, but I don't plan to buy for another year or so and my parents want to give half of the money to me and half to my sister. Should I use it to boost my deposit in the future, it should be considered as savings because that's what it's going to be. And that's my question here.

But knowing how many different rules are out there, lenders might think I borrowed the money to boost my deposit which technically isn't true. I believe kingstreet provided a valid answer and also HappyMJ has a valid point, but I'd like to avoid having that much cash on me if possible. I think I'll go with what kingstreet said and just hope they won't ask for more than a year's worth of statements.

kingstreet

A year was just an example.

It may be more or less than that.

audigex

If your parents are not and will not be liable for inheritance tax, it's your money as soon as they give you it. You may need to prove it's a gift (a letter is sufficient, but some lenders will require a more formal form from your parents), and you may need to pay some kind of insurance against your parents potentially claiming equity in the house. This isn't likely to be expensive, I believe mine was around £100 for a £10k gifted deposit

If your parents could be considered liable for inheritance tax, the above applies but the important milestone is 7 years! If they die within 7 years, the gift could be considered part of their estate and is therefore not necessarily your money. That said, as long as you're going to receive more than £8k from their estate after debts, it's unlikely to be an actual issue - again, it's just paperwork

https://www.gov.uk/inheritance-tax/gifts

idkwhattosay

Thank you audigex and thanks everyone for your time. I got my answers.

HappyMJ

idkwhattosay wrote: »

@saverbuyer: That's not related to what I'm asking here. I paid off my loan, I am debt free. I know what it looks like but it's not like that at all. It's not a deposit gift! It would be a deposit gift should I decide to buy right now, but I don't plan to buy for another year or so and my parents want to give half of the money to me and half to my sister. Should I use it to boost my deposit in the future, it should be considered as savings because that's what it's going to be. And that's my question here.

But knowing how many different rules are out there, lenders might think I borrowed the money to boost my deposit which technically isn't true. I believe kingstreet provided a valid answer and also HappyMJ has a valid point, but I'd like to avoid having that much cash on me if possible. I think I'll go with what kingstreet said and just hope they won't ask for more than a year's worth of statements.

Oh no I didn't mean withdraw it all as cash just as soon as you're paid move your salary into your savings account and keep spending the balance in your current account until it goes down to zero.

You only then need to present the statements for your savings account showing your salary being saved each month and the balance increasing.