Gifted deposit or not?

barneynutt25

Hi, me and my partner are buying a house and we have the deposit between us in my partners savings account and my bank account. A family member gifted me £3000 last tax year and £3000 this tax year and i have decided to use that towards the deposit. The mortgage lender (through the broker) is asking for us to complete a gifted deposit form. I thought that due to the amount being no more than the tax free £3000 in this tax year and the last, that it didn’t have to be declared to the lender as a gifted deposit? Advice please, thank you. 

davidmcn

Whether the lender wants to treat it as a gifted deposit has got absolutely nothing to do with tax. If the broker doesn't think the lender has a problem with it being a gifted deposit, why not just go along with treating it that way?

barneynutt25

Because we’ve not informed the conveyancing solicitor that there is not a gifted deposit. I don’t want there to be conflicting information plus they want to charge extra for using a gifted deposit 

barneynutt25

Sorry I mean we’ve not informed the conveyancer that there’s a gifted deposit 

davidmcn

You do need to have a consistent story which everybody is happy with. The solicitor needs to check the source of your funds for money-laundering purposes, so depending on how far back they're looking they may be asking questions about what the money is and asking for ID etc from the gifter - and also having to tell the lender that there appears to be a gifted deposit and whether they're happy with that.

MWT

Hopefully it is a close family member as there are often tight limits on who can be the source of a gifted deposit.

Parents and siblings are usually fine though...

The solicitor you are using has more work to do so a higher fee is not unreasonable and tax regulations have no relevance to this, what you describe is a gift and needs to be documented as such.

barneynutt25

The fact is the money was gifted to me but not for the purpose of a deposit, it was for me to do what I liked with and I’ve now decided to use it towards a deposit. 

barneynutt25

The gifted deposit form asks the gifted to sign and declare its a gifted deposit so I’m not sure how the family member (it is a close one) can declare this when they didn’t specifically gift it as a house deposit. It wouldn’t be a true declaration surely?

MWT

barneynutt25 said:

The fact is the money was gifted to me but not for the purpose of a deposit, it was for me to do what I liked with and I’ve now decided to use it towards a deposit. 

This isn't about intent it is about source of funds.

You have to show where the money you intend to use for the deposit came from, so if this money came from a close relative and is going to form part of your deposit then it is a gift as far as the lender and your solicitor is concerned. 

... but if it came from your Great-Aunt for example rather than from your parents then the odds are it isn't going to be an acceptable source anyway...

barneynutt25

MWT said:

barneynutt25 said:

The fact is the money was gifted to me but not for the purpose of a deposit, it was for me to do what I liked with and I’ve now decided to use it towards a deposit. 

This isn't about intent it is about source of funds.

You have to show where the money you intend to use for the deposit came from, so if this money came from a close relative and is going to form part of your deposit then it is a gift as far as the lender and your solicitor is concerned. 

... but if it came from your Great-Aunt for example rather than from your parents then the odds are it isn't going to be an acceptable source anyway...

Thanks, it is a close relative so will be accepted. So it doesn’t matter if it’s under or over the £3000 it’s still a gifted deposit? Thanks 

davidmcn

barneynutt25 said:

The gifted deposit form asks the gifted to sign and declare its a gifted deposit so I’m not sure how the family member (it is a close one) can declare this when they didn’t specifically gift it as a house deposit. It wouldn’t be a true declaration surely?

What the mortgage lender cares about is that it's a no-strings-attached gift, and not a loan (which you haven't declared as a future liability) or something giving the donor a stake of some sort in the property. They're not particularly bothered whether the intention was that the gift be spent on the house.