Buying a house fully with cash from father

Bossypants

£3000 is the limit under which inheritance tax does not have to be paid, i.e. if your father gifted you £3000 today and then died before 7 years, you would still not need to pay tax on the gift.

Any gift of a value above £3000 will incur inheritance tax if the gifter dies before the 7 year mark, regardless of what form it takes, i.e. the whether he gives you the cash or the house itself, the result will be the same.

00ec25

Lauraairving wrote: »

Thank you G_M. But if dad bought it as a second house in his name and paid stamp duty and then passed away within 7 years, would inheritance tax still be paid?

I’m so confused as I’ve read you can only give someone £3000 per year so I don’t get how he can just transfer me £97,500.

because you have done nowhere near enough reading...

the £3k limit is the amount of money that someone can give in a single tax year and NOT be subject to the 7 year rule

if giving >£3k, then the 7 year rule applies during which time if dad dies his estate may be subject to inheritance tax if his estate (incl the gift) is big enough. I somehow doubt his estate is that big....

Bossypants

00ec25 wrote: »

because you have done nowhere near enough reading...

To be fair I think these things are genuinely confusing for people who have never even thought about them before, there's so much information out there it can be hard to know where to start. OP is asking an honest question on an advice forum before taking any action, which is a perfectly normal thing to do.

Lauraairving

Wow I didn’t expect a rude reply. I’ve never been in this situation and I couldn’t find any straight forward articles online, hence why I posted on here. So far I’ve been given some very good advice. So thank you to the people giving me good advice without the need for sarcasm.

Cakeguts

I am not sure what would happen if your father needed to pay for his care when older?

Lauraairving

What do you mean Cakeguts? The money he is buying isn’t the house with isn’t all of the money that he got from when my mum passed away. He should have £120k left after he has bought the house for us.

Lauraairving

Also my dad is only 54 my mum was 48 when she passed away.

pinklady21

Sorry for your loss.
I think the poster above is referring to Deprivation of Capital. Something else for your father to consider.
Nobody knows what care they might need, or what the cost might be.
In short, if he finds he needs care, then all his capital is taken into account including any capital he has spent so that he can claim benefits or have his care needs paid for by the Council.

It may be that he is in good enough health that if the time ever comes sufficient time will have elapsed.
I hope it all works out for you.

Lauraairving

Thank you PinkLady. I will look into this. I’m just trying to make sure things are done in the best way possible without things cropping up that we aren’t aware of.

Bossypants

pinklady21 wrote: »

Sorry for your loss.
I think the poster above is referring to Deprivation of Capital. Something else for your father to consider.
Nobody knows what care they might need, or what the cost might be.
In short, if he finds he needs care, then all his capital is taken into account including any capital he has spent so that he can claim benefits or have his care needs paid for by the Council.

It may be that he is in good enough health that if the time ever comes sufficient time will have elapsed.
I hope it all works out for you.

I know people like to throw this idea around a lot here, but a key component of deprivation of assets is that the gift must be shown to have been deliberately made with the intention of avoiding paying for care and the person must have known they were going to need care at the time of making it.

A healthy 56 year old making a gift to his child from his deceased wife's estate in order to allow said child to buy their home is highly unlikely to fall into that category, unless there is a lot more to this story.