Gifted House deposit and inheritance tax - help.

amylou1107

My boyfriend and I brought our first house back in April this year.
His parents gifted us £70k for our deposit.
We have now just found out that his dads cancer has returned and only has a few months left to live which is devastating news.
Does anyone know what happens around inheritance tax? Will we have to pay back some money? Obvisouly the money is all tied up in the house so I'm a little worried.
If the money came from his parents and his mum is still around will we still need to pay inheritance tax?

Any help would be greatly appreciated. Thank you.

getmore4less

Unless there has been a load of other gifting there will be no financial impact on yourselves regarding the £70k gift.

Yorkshireman99

amylou1107 wrote: »

My boyfriend and I brought our first house back in April this year.
His parents gifted us £70k for our deposit.
We have now just found out that his dads cancer has returned and only has a few months left to live which is devastating news.
Does anyone know what happens around inheritance tax? Will we have to pay back some money? Obvisouly the money is all tied up in the house so I'm a little worried.
If the money came from his parents and his mum is still around will we still need to pay inheritance tax?

Any help would be greatly appreciated. Thank you.

You have no liability for inheritance tax. Did the money come from a joint account or just from yoiur father? The amount he actually paid gets added back to his estate for purposes of the IHT calculation. Do you know what the likely value of his estate will be?

amylou1107

@yorkshireman99 thanks for your reply.
I'm not sure whether it came from his account of a joint account but I will find out.
Would everything just go to his wife (my boyfriends mum)? Value of the estate is likely to be quite substantial.

Yorkshireman99

amylou1107 wrote: »

@yorkshireman99 thanks for your reply.
I'm not sure whether it came from his account of a joint account but I will find out.
Would everything just go to his wife (my boyfriends mum)? Value of the estate is likely to be quite substantial.

He nneds to make a will if he has not already done so and do it this week. If he dies intestate, in other words without a will, his wife and children will share things.

Keep_pedalling

As already said a will is number one priority. Assuming the your GFs parents estate is in IHT territory (assuming they own property over £200k then their combined tax free estate is currently £850K which will grow to £1M if his wife lives beyond April 2021) and that he leaves everything to his wife, then regardless of the size of the estate then no IHT will be due, his gift will simply reduce the amount of his nil rate band that can be passed to his wife's estate.

The details of this gift need to be documented and kept with the will. If this was a joint gift then only £35k came from him, and if he made no other such gifts in this and the preceding tax year then he can use his £3,000 annual allowance to cut the taxable element down to £29k.