Gifting money to a friend to help buy a house

shapedcarrot799

Hello,
I want to help my oldest friend who is a hardworking single mum buy a house. I want to give her 20k to give her a deposit and she will pay me back as and when she can.
I'm advised I can only give 3 k and then I have to declare the rest to HMRC which could be subject to inhertance tax. This seems quite complicated, is this the case?

Advise is appreciated!!

Sea_Shell

If she also needs a mortgage, you'll probably need to sign to confirm that it is a GIFT, with no repayments.

If you can't afford to gift, don't lend.

Sea_Shell

Would your estate be liable for IHT?

Are you married?  Own your own home?

MovingForwards

Unfortunately gifts from friends are not accepted by mortgage lenders for / towards deposit. A mate offered to assist me with a little bit and I was told no as we're not related.

MaryNB

MovingForwards said:

Unfortunately gifts from friends are not accepted by mortgage lenders for / towards deposit. A mate offered to assist me with a little bit and I was told no as we're not related.

Nationwide and Natwest will accept a gifted deposit from a friend. 

Mojisola

shapedcarrot799 said:

I want to help my oldest friend who is a hardworking single mum buy a house. I want to give her 20k to give her a deposit and she will pay me back as and when she can.
I'm advised I can only give 3 k and then I have to declare the rest to HMRC which could be subject to inhertance tax. This seems quite complicated, is this the case?

The title of the thread says 'gift' but this is clearly a loan.
Anyone can gift as much as they like - the £3000 is an annual allowance that is never taken into account for IHT.

If you were to die within the next seven years, would your estate be liable for IHT?  If not, there's no need to worry.

If this is a loan and not a gift, then IHT isn't an issue - although the debt would have to be paid back into the estate at some point.

Keep_pedalling

There are no limits to how much you can gift, £3000 is simply an annual allowance that can be given away that does not have to be declared on IHT forms if you die within 7 years. There is never any additional IHT associated with gifts.

The problem with your proposal is that it is not a gift it is a loan. If you can afford it make it a gift if not then don’t go there it is a recipe for a lost friendship, and anyway no lender with give a mortgage to someone who has borrowed the deposit.

shapedcarrot799

Thanks everyone. I will make it as a gift. My own estate will be subject to inheritance tax if I die (not planning to!) so I'm going ot give £3000 before april 5th and the rest after that. I'm surprised mortgage lenders care if the money is sitting in someone's account how do they know if it's a gift or savings?

shapedcarrot799

My final quesiton is that do I have to make a declaration to HMRC when I make the gift? Or only if I die?

Keep_pedalling

shapedcarrot799 said:

Thanks everyone. I will make it as a gift. My own estate will be subject to inheritance tax if I die (not planning to!) so I'm going ot give £3000 before april 5th and the rest after that. I'm surprised mortgage lenders care if the money is sitting in someone's account how do they know if it's a gift or savings?

If you did not use your exemption in the last financial year you can carry that forward. If that is the case then you can gift £6k before the end of the FY, and the rest  after 5th April, which would make £9k exempt, and £11k as a PET.

kimwp

shapedcarrot799 said:

Thanks everyone. I will make it as a gift. My own estate will be subject to inheritance tax if I die (not planning to!) so I'm going ot give £3000 before april 5th and the rest after that. I'm surprised mortgage lenders care if the money is sitting in someone's account how do they know if it's a gift or savings?

The point is not whether it is a gift or savings but whether it is a loan IE debt.