"Lending" son stamp duty

littlerock

I want to pay the stamp duty for my son on his house purchase. The seller has asked his solicitor to verify my son is in a position to proceed and he in
turn has asked my son to demonstrate he has the funds readily available.

I can pay the amount - a 5 figure sum - into his bank account but will that attract the interest of the IR? Should we structure as a loan - even if I later cancel it? Or should we do it some other way?

lewishardwick

Gifting your son the money is the only easy option. The solicitor will expect you to sign a declaration confirming this.

You will also be expected to provide proof of the source of the money...

If it is truly a loan, it will impact his affordability and the mortgage lender may have to make adjustments or withdraw their offer completely.

Thrugelmir

Are you concerned that the source of the money will be questioned?

davidmcn

Do lenders care about where the SDLT comes from? The price, yes, but I can't see that it matters whether it's a loan or a gift. The only CML Handbook requirement is to declare if any of the price hasn't come from the borrower.

The solicitor may need evidence of the source of funds to satisfy their anti-money-laundering requirements.

csgohan4

bit worrying your son is buying a house/flat and didn't calculate or budget for the stamp duty? what else is he going to beg for next?

POPPYOSCAR

csgohan4 wrote: »

bit worrying your son is buying a house/flat and didn't calculate or budget for the stamp duty? what else is he going to beg for next?

Some parents like to help their children out, especially when they can afford to do so.

You cannot after all take it with you, why not have some pleasure seeing them get the benefit of it while still around.

littlerock

son is paying g everything else and I wish to help. I cannot take it with me. one option seems to be an interest free loan repayable when the house is sold. anyone done this? i would pay it into his account by bank transfer.

think proof is needed because previous two sales has fallen through. seller now needs quick sale and is willing to accept lower price if son can show has funds available and ready to proceed

csgohan4

POPPYOSCAR wrote: »

Some parents like to help their children out, especially when they can afford to do so.

You cannot after all take it with you, why not have some pleasure seeing them get the benefit of it while still around.

Sure if you can afford to. But unless you don't expect to get it back, Money and family/friends shouldn't mix.

da_rule

As soon as you make it a loan it will have to be declared to the mortgage lender. If you then make references to the property (i.e. to be repaid on sale of the property) then they will definitely be interested.

As the SDLT is a cost related to the transaction, how it is going to be paid is of interest to the mortgage lender. When I purchased I not only had to show that I had the deposit but that I also had enough money to cover the SDLT and legal fees. If you don't have these things then you cannot afford to buy.

I would gift it to him. We received a gift and our solicitor asked that the funds be transferred straight to them, rather than to me and then on to them. You'll probably have to sign a document saying it's a gift and doesn't have to be repaid etc. Obviously if you make an unofficial agreement that you want the money back then who's to know? You just won't have a way of enforcing it should you fall out.

Keep_pedalling

littlerock wrote: »

son is paying g everything else and I wish to help. I cannot take it with me. one option seems to be an interest free loan repayable when the house is sold. anyone done this? i would pay it into his account by bank transfer.

think proof is needed because previous two sales has fallen through. seller now needs quick sale and is willing to accept lower price if son can show has funds available and ready to proceed

You said you can't take it with you, so presumably this is money you afford to give away, so keep it simple and make it a gift. There is no gift tax in the UK so HMRC will only be interested if you die within 7 years of the gift, and only then if your estate exceeds you nil rate band.