How do I give my son money?

xylophone

Then the story is as follows?

The OP is female (sorry about post 2 OP - I should simply have said "spouse")!

In January 2017, her mother died testate. It had been her mother's wish and intention that her grandson and granddaughter by OP should each benefit from a bequest, but owing to misunderstanding/faulty drafting of the will, the whole of the estate went to the OP. No Deed of Variation was done and it appears that it is too late to do one now. The OP shared the legacy with her spouse.

At the time of her mother's death, the OP, her spouse and at least one of her two children (the son) were living in the family home, (property A).

In August 2018, the OP used the money realised from the legacy from her mother to pay off the mortgage on her /spouse's PPR (A) and to put down a deposit on property B into which she has moved with her husband (and possibly daughter). Her son and his fiancee remain in property A.

She seems to have paid the additional SDLT on second home on this purchase but will be able to reclaim this on the sale of property A to her son.

It is barely a year since she moved out of PPR A - she and spouse will need to look at CGT but it would seem unlikely that much (if any) will be payable.

She/spouse now want to sell property A to their son for £100,000 (rather than the £115,000 it is valued at) so as to fulfil his grandmother's wish that he should benefit from her estate.

She/spouse are therefore making him a gift of £15,000 - this is partially covered by their joint gift allowances for two years.

They could also each make him an additional gift of £5000 each on marriage.

Once they have the £100,000 from the son, they wish to reduce the mortgage on property B and hold £15,000 in reserve to make a gift to their daughter in recognition of the grandmother's wish.

They propose doing this in stages of £4000 a year - this will easily be covered by their gift allowances going forward.

In any event, any gifts have the PET possibility and on top of that, the estates of OP/ spouse may not in any case be liable for IHT.

00ec25

xylophone wrote: »

It is barely a year since she moved out of PPR A - she and spouse will need to look at CGT but it would seem unlikely that much (if any) will be payable.

for the avoidance of doubt, even if the sale took place after April 2020 when the deemed occupancy period reduces to 9 months, there is absolutely no chance whatsoever that a CGT liability will arise on the 79k gain on disposal (at market value, not at 100k cash, but nonetheless also needing to deduct buying and selling costs as well ) to son, because the gain will be covered in full by PRR (1995 - date leaving + 18 (or 9) months deemed occupancy.
plus , as joint ownership applies, each owner has their own annual exempt amount as well to cover any PRR shortfall if caused by needing to calculate under the 9 month rule.

pulliptears

Put much more succinctly than I ever could @xylophone
Thank you.

Zero_Sum

Selling a £115k house for £100k isnt going to be questioned surely?
And its below stamp duty threashold anyway.

I'd just sell the house to son for the £100k. Cant see why thered be any issues.

pulliptears

Zero_Sum wrote: »

Selling a £115k house for £100k isnt going to be questioned surely?
And its below stamp duty threashold anyway.

I'd just sell the house to son for the £100k. Cant see why thered be any issues.

TBH local market has one across the road at £110 and one two doors down at £125. Its probably £120 but in this climate who knows. hadn't actually thought of doing things that way though!

pulliptears

The issue will be son has no deposit, so reducing house to the £100 wont be possible for him. His mortgage offer uses the £15k as deposit with exchange and completion on the same day.

Zero_Sum

pulliptears wrote: »

The issue will be son has no deposit, so reducing house to the £100 wont be possible for him. His mortgage offer uses the £15k as deposit with exchange and completion on the same day.

£15k isnt a massive amount enough for people to ask questions.
I take it son is working? Can you not just give him money & just say hes saved it over last few years for mortgage purposes

pulliptears

Zero_Sum wrote: »

£15k isnt a massive amount enough for people to ask questions.
I take it son is working? Can you not just give him money & just say hes saved it over last few years for mortgage purposes

Possibly. He is working yes and living with fianc! though the purchase is in his name only.
I really wish I'd known about that deed of variation, would have made life so much simpler in the long run. As I say though solicitors were crap and I'd just lost mum very suddenly so my head wasn't really thinking about dividing the estate. At the time I thought because I'm an only child it would be less complex. All that aside I'd much rather have my lovely mum back.

DH seems to think anything over the £12k gifted week be seriously scrutinised where I'm more of the 'it's only another £3k I'm sure they won't care " school of thought.

Zero_Sum

pulliptears wrote: »

Possibly. He is working yes and living with fianc! though the purchase is in his name only.
I really wish I'd known about that deed of variation, would have made life so much simpler in the long run. As I say though solicitors were crap and I'd just lost mum very suddenly so my head wasn't really thinking about dividing the estate. At the time I thought because I'm an only child it would be less complex. All that aside I'd much rather have my lovely mum back.

DH seems to think anything over the £12k gifted week be seriously scrutinised where I'm more of the 'it's only another £3k I'm sure they won't care " school of thought.

Gift £11k & sell house for £110k

AnotherJoe

I'm not sure what all the fuss is about unless you mistakenly believe there is tax payable on gifts or there is a limit on gifts.
There isn't.
Just give the kids the money.
Job done.