Buying a house in cash for my son

propertyhunter

theartfullodger said:

I brought my 3 sons 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.

Each to their own as you say. I personally cannot accept money from my parents to contribute towards the house I'm buying at present. I mean they've sacrificed so much already, and you only realise this when you are a lot older and have a better understanding of what they've done. I really want them to spend it on holidays and things they enjoy. 

I'm sure the OP's son will be very grateful to his mother though - young people these days know the very real struggle to own a property in 2022. 

miro1979

theartfullodger said:

I brought my 3 sons 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.

Yep, me too. And my son works hard, has a good job and if things remain like that he will be able to afford a house with a mortgage. All I am doing is freeing him up from that burden allowing him to save money to eventually purchase a much better property for him and, if he chooses, his family.  As a psychiatric nurse he doesn't get paid a great deal and I can help him out. And anyway, at the end of the day the most likely scenario if I don't provide for him now he will get it when I'm gone.

Mojisola

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.

As MovingForwards says - the only person involved is you - you are the only beneficiary adversely affected by the DOV.  It's very straightforward to do and would remove any worry of a future tax liability.

dimbo61

Hi have you looked at Offset mortgages ?
YBS offer Offset mortgages with friends and family.
Your Son buys a home with an Offset mortgage and Help from Mum and Dad towards the deposit say 10/15% and maybe LISA,s ISA,s !!!!
Once property purchased and Son moved in then Dad opens Offset account and puts large amount of money equal to outstanding mortgage balance.
Each month mortgage payment comes out and NO Interest is paid.
Dad could set up direct debt to transfer set amount equal to mortgage payment into LISA or Stocks and Shares ISA, Premium bonds, AVC,s etc

Keep_pedalling

miro1979 said:

theartfullodger said:

I brought my 3 sons 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.

Yep, me too. And my son works hard, has a good job and if things remain like that he will be able to afford a house with a mortgage. All I am doing is freeing him up from that burden allowing him to save money to eventually purchase a much better property for him and, if he chooses, his family.  As a psychiatric nurse he doesn't get paid a great deal and I can help him out. And anyway, at the end of the day the most likely scenario if I don't provide for him now he will get it when I'm gone.

You know your son better than those trying to put you off doing this, and I agree with you, if you can afford it let them have some of your wealth when most needed and you are still alive to see the money put to good use. 

getmore4less

miro1979 said:

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.

Don't think you have grasped IHT

If the gift is only £145k

No taper relief unless significant other gifts within the 7 year window.

Without other gifts
No tax due by the recipient if you die in 7 years it is paid by the estate.

The advantage if you can DOV an inheritance to divert to son eliminates the 7year overhang on your estate.

ObserverOfLife

If you gift the money now, it becomes a PET (Potentially Exempt Transfer). The IHT will only become chargeable if you die within the next 7 years but assuming this is your first gift, this will be covered by your nil rate band of £325,000 so no IHT paid on this transfer but there will be a reduction of your nil rate band to cover other assets part of your estate. This essentially resets if you continue to live past 7 years after date of transfer.

As getmore4less explained above, the taper relief is ONLY if you've previously made gifts that used up the nil rate band already. This basically reduce your IHT liability subject to continuing to live past 3 years after date of transfer.

Note that you could utilise your annual exemption amount of £3,000 (and previous year if you've not made gifts already so £6,000 in total). 

badger09

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.

PLEASE reread MovingForwards and Mojisola's posts (2.40 & 3.53 yesterday)  

Only the beneficiary who is adversely affected by the DOV (ie you!) need to be involved in any DOV. If you are certain this is what you want to do, please reconsider DOV

getmore4less

badger09 said:

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.

PLEASE reread MovingForwards and Mojisola's posts (2.40 & 3.53 yesterday)  

Only the beneficiary who is adversely affected by the DOV (ie you!) need to be involved in any DOV. If you are certain this is what you want to do, please reconsider DOV

You don't have to involve anyone else unless there is a change in IHT for the estate your were a beneficiary of.

When the time comes it is a document that that your executor(If needed within 7 years) uses to show the money was never yours. for IHT docs for your estate

miro1979

Thanks all for your help, particularly those kindly explaining the DOV and IHT rules. I will look into this over the weekend and hopefully it is the way forward.