Family gift

Julcol

I am giving my father money to buy a property we didn’t want to lose , as the buyer for his house back out in the final week. The solicitor are classing it as a gift, non refundable, dad is going to pay me back once his house sells, I deal with all dads things now he is 82 and just waiting power of attorney. I will have paid tax on the money this year as I sold my business, will I have to pay more tax ? And would there be a problem with my father repaying the gift? Does it need to be written as a loan, I have no concern what so ever about getting the money back, just don’t want to be doing something wrong? I am desperate as supposed to be getting keys this week and the solicitor is already dragging things out and missed filling things which have held the source of funds check up massively!

[Deleted User]

If it's being declared as a gift, then it doesn't need to be paid back. If you write it as a loan, then it's not a gift.

Separately, a loan won't attract tax.

glennstar

A loan won't attract tax on the father's side, if you make a gain on the repayment it will be subject to tax. If the loan is a "gift" is going to be paid back then it isn't a gift. Given his age and the lack of detail related to the repayment schedule it might be (realistically) better to wait until he doesn't need the property any longer, unless there are siblings that will complicate the situation.

If you come back into possession of the property and sell it then you will be subject to capital gains... and if this was a gift then you will be subject to a lot of tax. Have you considered/can you afford to rent it to him? This might be a better, cleaner option if possible... only a thought.

Julcol

I won’t be making any return on it , I have asked emailed the solicitor tonight to ask if it should have been declared as a loan and not a gift, it’s £48 k I don’t really want to have to pay tax on it , I was just trying to help my dad . Unfortunately the first solicitor wasn’t much help I think she should have said declare it as a loan.
I suppose my question is can I leave it legally as a gift or get them to change it to a loan? And also the tax implications?

[Deleted User]

If it's a loan, then declaring it as a loan is the only way to avoid making a fraudulent application.

The risks are small, but the consequences are massive.

Julcol

Thank you, I guess I’m just going to have to ask the solicitor to change it to a loan and hope it doesn’t hold the process up

MEM62

Deleted_User wrote: »

If it's a loan, then declaring it as a loan is the only way to avoid making a fraudulent application.

Fraudulent application for what? A mortgage has not been mentioned.

Mojisola

Julcol wrote: »

I am giving my father money to buy a property we didn’t want to lose , as the buyer for his house back out in the final week. The solicitor are classing it as a gift, non refundable, dad is going to pay me back once his house sells, I deal with all dads things now he is 82 and just waiting power of attorney. I will have paid tax on the money this year as I sold my business, will I have to pay more tax ? And would there be a problem with my father repaying the gift?

If you declare it to be a gift and then, as his POA, pay the money back to yourself, that will look very dubious.

AnotherJoe

Assuming that this is in effect a bridging loan to allow dad to downsize/ move without getting a mortgage it most certainly should be declared as a loan, with a short but explicit agreement drawn up to that effect, to protect the OPs money should events occur that mean that social services need to intervene, or other possible even if unlikely events which leads to OPs money being treated as fathers.
No tax implications.