Buying a house in cash for my son

miro1979

Hi all, my father has left me some money which when I add to my savings I wish to buy a house for my son outright.  The purchase of the property will be £145k.  I understand the risk this has on my son if I die within 7 years due to inheritance tax. But what other costs do we have to consider? Any help will be appreciated and if you need more information to help I'll respond as soon as I can.  Many thanks, Miro.

user1977

Think you might have misunderstood - it's not really a risk for your son if you die within 7 years. If you don't gift the money, and still have it when you die, then it will definitely be taken into account for IHT purposes - the position doesn't get any worse if you gift it, and even after (I think) 2 years the taxable amount tapers off.

The other costs will be the usual ones for buying a house.

Brie

If you need care of any sort this might be considered deprivation of assets.  I don't think there's any time limit on that.  

Solicitor's fees, moving costs all being covered?  Any renovations needed??

And things to think about.....

Does your son want you to buy him a house?  Can he afford to maintain it?  Is he settled in that area?  When my mom gave me a car it actually became quite a burden for me financially.  

What if he decides to sell it and spend all the money on a toy boy or gambling?  Does he have dependents or need a will to revert the property to you if he should unfortunately predecease you?

wilfred30

Will you be buying it yourself in your own name or giving your son the cash to buy it in his name?

miro1979

The house would be in my son's name.

miro1979

Brie said:

If you need care of any sort this might be considered deprivation of assets.  I don't think there's any time limit on that.  

Solicitor's fees, moving costs all being covered?  Any renovations needed??

And things to think about.....

Does your son want you to buy him a house?  Can he afford to maintain it?  Is he settled in that area?  When my mom gave me a car it actually became quite a burden for me financially.  

What if he decides to sell it and spend all the money on a toy boy or gambling?  Does he have dependents or need a will to revert the property to you if he should unfortunately predecease you?

We have discussed this offer in detail and it seems the best option for him. I fully expect life will change for him as he ages and if he decides to sell the house and squander the money then that his prerogative. I don't want to put conditions on his future but also, at this stage, just want to give him such a large amount of cash. We both agreed that buying a property is the most sensible option at this stage of his life. But thanks for the warnings.

Mojisola

Are you within the time limits to do a deed of variation to your father's will so that the inheritance goes straight to your son?

miro1979

user1977 said:

Think you might have misunderstood - it's not really a risk for your son if you die within 7 years. If you don't gift the money, and still have it when you die, then it will definitely be taken into account for IHT purposes - the position doesn't get any worse if you gift it, and even after (I think) 2 years the taxable amount tapers off.

The other costs will be the usual ones for buying a house.

Yes, good point. However, if I die in 7 years, and I agree that the tax burden decreases during that period, then the money inherited by my wife will be protected but not the money gifted to my son. I therefore think the risk is on him as theoretically to pay it he may need to sell the house or get a loan to cover the tax.

miro1979

Mojisola said:

Are you within the time limits to do a deed of variation to your father's will so that the inheritance goes straight to your son?

My father's will was complex involving a number of beneficiaries. I really couldn't go through that again. So, in answer to your question - I don't know and a stronger person than me may wish to look into it but I won't be. Thanks for the suggestion.

theartfullodger

I brought my 3 sons up to be self-sufficient and to look after/ earn enough for themselves.  I've helped them each at various times but I'd never have bought them a whole property.  No offence to anyone but unless e.g. special needs it's not the prudent way for kids.

Best wishes to all.

MovingForwards

miro1979 said:

Mojisola said:

Are you within the time limits to do a deed of variation to your father's will so that the inheritance goes straight to your son?

My father's will was complex involving a number of beneficiaries. I really couldn't go through that again. So, in answer to your question - I don't know and a stronger person than me may wish to look into it but I won't be. Thanks for the suggestion.

You don't involve the other beneficiaries, just get a DoV drawn up to account ngor the money you want to give your son to buy the house, it never touches your estate. Only thing is it has to be done within 2 years of death.