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Bridging loan from dad
diyaddict
Posts: 2 Newbie
My daughter has her flat on the market (owned outright) she has seen the flat she wishes to buy (for cash) but until she sells she can't afford to buy. Can I loan her the cash, which she will repay when she sells her present flat? Any tax implications/ 7-year rule etc?
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Comments
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Any tax implications/ 7-year rule etc?
No tax to pay - unless you charge interest. The interest would be income for you, so you would pay income tax on just the interest.
The '7 year rule' applies to gifts, not loans.
But the solicitors would need to do 'Anti Money Laundering checks' on you - i.e. check your bank statements etc, to see where the money came from.0 -
How were you ( both... ) going to document this "loan"??
Strongly suggest you carefully consider what happens should you (hopefully won't) die before all of loan is repaid.
If she needs a mortgage to buy the new place the lender will almost certainly need a document from you, in writing, confirming this "loan" is actually a gift. (Been there for two of my kids, but not huge amounts...). i.e. IHT may apply...
Daughter should check with lender and get reply in writing/email - which you should then read.0 -
She'll have to budget for paying additional stamp duty as she's buying a second property. Although if she sells her other property within three years then she can claim it back.
Has she had any interest in her flat currently? If not is it worth thinking about reviewing the price now rather than letting it sit empty which will also have insurance implications.0 -
My daughter has her flat on the market (owned outright) she has seen the flat she wishes to buy (for cash) but until she sells she can't afford to buy.Has she had any interest in her flat currently? If not is it worth thinking about reviewing the price now rather than letting it sit empty which will also have insurance implications.
If she's brave enough to put the listing up on here, people will give advice on how to get a sale - the changes recommended for other people have helped them sell.0
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