Gifting my daughter some money to buy her first flat

gettingtheresometime

Is the same solicitor doing the conveyancing (& therefore suggesting it should be treated as a gift) the same one drawing up the agreement?

the only reason I ask is that by suggesting it should be treated as a gift means that in 7 years time it doesn't count towards any IHT liability yet they seem to be suggesting you take any advantage of any growth without paying the additional stamp duty. Sounds very dodgy to me.

Keep_pedalling

We have provided a lot of financial help to our children, both in the gifts and loans, but in the case of the later it is strictly interest free it’s far simpler. When you daughter does sell she will presumable need any additional equity built for her next purchase so you will probably end up giving it to her anyway.

I can understand you wanting to avoid her getting a mortgage, but if you are wanting your loan repaid on the sale of her home your are just kicking the need for getting one down the road for a few years, so why not just make her a smaller sum as a gift, leaving her to make up the shortfall with a mortgage?

VXman

Aspatria said:

Thank you everyone for your input.
My daughter is putting in an equal amount of money that she has saved .
I started out calling this a loan, but was asked to refer to it as a ‘gift’ by the solicitor. I really don’t care what it’s called so long as she can get on the property ladder. Similarly the ‘point of sale’ agreement was the solicitors idea.

The money I am lending/gifting is part of my retirement sum, which I don’t need now (particularly in lockdown) but would like to use a bit later on for travelling etc. 

This started out as a straightforward idea between myself and my daughter to simply buy a (very) small flat outright that she could call her own. Then sell in 5 years or so when she is ready to move on and each go our separate (financial) ways.

You are in a very similar situation to me, except my son is not contributing anything to the house purchase as his income is not enough. I have decided to go down the loan route and he will pay us a monthly amount back to boost my monthly pension. We are considering drawing up an agreement between us. There is a thread here where I first asked for thoughts/ideas on this.I started out talking about giving but soon realised a loan was a better route.
https://forums.moneysavingexpert.com/discussion/6215193/giving-money-to-my-son-to-buy-a-house#latest

Keep_pedalling

VXman said:

Aspatria said:

Thank you everyone for your input.
My daughter is putting in an equal amount of money that she has saved .
I started out calling this a loan, but was asked to refer to it as a ‘gift’ by the solicitor. I really don’t care what it’s called so long as she can get on the property ladder. Similarly the ‘point of sale’ agreement was the solicitors idea.

The money I am lending/gifting is part of my retirement sum, which I don’t need now (particularly in lockdown) but would like to use a bit later on for travelling etc. 

This started out as a straightforward idea between myself and my daughter to simply buy a (very) small flat outright that she could call her own. Then sell in 5 years or so when she is ready to move on and each go our separate (financial) ways.

You are in a very similar situation to me, except my son is not contributing anything to the house purchase as his income is not enough. I have decided to go down the loan route and he will pay us a monthly amount back to boost my monthly pension. We are considering drawing up an agreement between us. There is a thread here where I first asked for thoughts/ideas on this.I started out talking about giving but soon realised a loan was a better route.
https://forums.moneysavingexpert.com/discussion/6215193/giving-money-to-my-son-to-buy-a-house#latest

Did you take long term IHT planning into account with that decision? In the long run a married couple with a joint estate in excess of £1M should probably go down the gifting route rather than a loan.