Loan to adult daughter?

RobSparky

Our adult self-employed daughter is currently living on a narrow boat that she owns (worth around £40,000). She is about to purchase her first house along with her boyfriend. My wife & I have offered to lend (interest free) them the value of the boat for their deposit until the boat can be sold. The cost of the house is around £170,000 so the rest will be met by a mortgage.
Of course the boat may not sell for the expected value, no worries, we're ok to carry the difference, and it may take a long time to sell, again we can wait.
I've always been on PAYE so not needed to understand self-employment. Are their tax implications, for her, or for us when we receive it back?
We would greatly appreciate any advice & guidance here.

If this were be turned into a gift, I understand £3,000 can be given by each of us per year without IHT implications (so £6,000 from my wife & I) and that this can be rolled over. But can it be rolled over for as many years as it takes to cover the £40,000?  I don't really want to do this because we have another daughter, but I do really want to see them housed!  I think my other daughter would like that too but we will need to discuss it before we go that route.

Martin_the_Unjust

Just a thought but why not keep it simple and buy the boat from her?

Thrugelmir

The mortgage lender will require your written confirmation that the money is a gift not a loan. 

kaMelo

RobSparky said:

Our adult self-employed daughter is currently living on a narrow boat that she owns (worth around £40,000). She is about to purchase her first house along with her boyfriend. My wife & I have offered to lend (interest free) them the value of the boat for their deposit until the boat can be sold. The cost of the house is around £170,000 so the rest will be met by a mortgage.
Of course the boat may not sell for the expected value, no worries, we're ok to carry the difference, and it may take a long time to sell, again we can wait.
I've always been on PAYE so not needed to understand self-employment. Are their tax implications, for her, or for us when we receive it back?
We would greatly appreciate any advice & guidance here.

If this were be turned into a gift, I understand £3,000 can be given by each of us per year without IHT implications (so £6,000 from my wife & I) and that this can be rolled over. But can it be rolled over for as many years as it takes to cover the £40,000?  I don't really want to do this because we have another daughter, but I do really want to see them housed!  I think my other daughter would like that too but we will need to discuss it before we go that route.

Your problem here is that her mortgage lender will not allow you to loan her the money simultaneous to them lending money for a mortgage.. Most lenders would only allow the mortgage to go ahead as long as you sign a form stating the money is a gift without reservation and as such you have no claim to the home upon which they are lending the mortgage on.

Your options appear to be give the money or purchase the boat.

Keep_pedalling

There is no actual limit of gifts, and going over the £3000 exempt limit has no actual negative tax implications, it just means no exempt amounts stay in your estate for 7 years. 

A loan will not incur any tax unless you are charging interest on it. As already suggested you could buy the boat from her and sell it when she moves out.

DCFC79

If you loan the money do make sure you get it written down that its a loan and how much a month, I've seen the damage money between family can cause.

I agree if you were to buy the boat would be the easier option.

RobSparky

Food for thought. Thank you everyone.