Tax implications on gift

N0024819

If I am given a 'gift' from parents to help with a deposit for a mortgage, am I able to 'gift' this back to them at a later stage once I have some equity in the house/raised some additional capital?

In this case, there is potential that the house I'm looking at could get planning permission to create a plot in the garden. My though is to sell it off and give back the gift if possible.

Am I right in thinking that the sale of the garden (if primary residence) would not be subject to CGT and that I could give back the gift without incurring any tax?

Obviously, we would all need to live for 7 years to avoid IHT.

Murdina

If your parents make you the gift unreservedly - in other words there is no expectation implicit or explicit you are going to refund it - then that should be fine.


Should you decide to develop the garden and at that point decide to make them a gift from the proceeds then that should be fine too. After all, there is no certainty you will get planning permission/make a gain at the time of the original gift.


However, if in due course you decide to seek planning permission at that stage you should take paid for professional tax advice. Selling off parts of the garden for development is far from straightforward (yes it may fall within your principal private residence exemption - but equally it might not - this is a complicated area of personal tax and commonly misunderstood).



There is a risk if you do things "wrong" that any gain could be taxed as income or that it is a capital gain but not attributable to the sale of the garden (for example, in some arrangements with developers involving options).