Gifting cash to buy a flat

matt_matt_matthew

Looking to buy my first home asap and have made an offer on a flat, i'm in the fortunate position now that my dad has offered the money needed so i can buy the flat outright with cash. As this is my first experience of buying a home i'm a little unsure of how the process of transferring the money works. I can find a lot of information about parents gifting cash deposits around 10-15% but not a lot about gifting bigger amounts.

1. Regarding cash gift, is it the same process for say a small amount like 10% all the way up to 100% of the cost of the property? 

2. Is the cash gift route the best way to go about this?

Thanks in advance 

Brie

There's a couple of issues with it - deprivation of assets being the first that pops into my mind.  If for whatever reason your dad needs the money for care any time soon (10 years? 20??) the local authority may look at your house as a way to pay for it despite that being in your name.  

Inheritance tax is another possibility - if he has enough to buy you a flat potentially IHT would need to be paid if he should die.  Not an issue if he last 7 years as I understand it.

Finally - what if you decide to sell the house and go on a round the world cruise with the proceeds?  Will he be ok with that?  What if you are married and get divorced or become bankrupt?  It will be considered you asset, not his.  

I suggest that a solicitor be involved to make sure everything is nice and tidy about this.  Someone else posting was suggesting give their child an interest free loan which might resolve some of the issues.

matt_matt_matthew

Thanks for the reply

The inheritance tax side of things has been sorted and worked out for all outcomes, i presumed with a 'gift letter' or whatever the official name is basically covers all legal aspects making the money mine and therefore the property mine, but yes once the ball is rolling i'll be in touch with a solicitor. 

user1977

Brie said:

Inheritance tax is another possibility - if he has enough to buy you a flat potentially IHT would need to be paid if he should die.  Not an issue if he last 7 years as I understand it.

This one gets misunderstood quite a lot - he's not going to make IHT any worse by making the gift. If dad still has the money when he dies, it's definitely going to form part of his estate for IHT purposes. It's more that giving away your assets shortly before you die isn't going to save you any IHT.

hackneylou

I don't know how much your Dad is gifting you but I gifted my daughter 200k recently to help her purchase her first flat (she also needed a mortgage) and the process was easy. The solictitor you use to buy the flat can email your Dad a form to complete saying the money is a gift not a loan. And your solicitor will also ask your Dad to show where his money came from if it is a large amount. For example, in my case I showed that it was from a recent property sale.    

user1977

hackneylou said:

The solicitor you use to buy the flat can email your Dad a form to complete saying the money is a gift not a loan.

That bit's only necessary where there's a mortgage lender involved. Otherwise the OP and their dad can document (or not!) in any way they like whether it's a gift or a loan.

eddddy

Probably, the only real issue will be that your dad will have to pass Anti Money Laundering checks.

So the solicitor will want to make sure your dad is who he says he is, and that the money is clean. (i.e. check that the money isn't stolen, profits from drug dealing, etc)

As long as your dad is happy to let your solicitor see his photo id, bank statements etc, that should be ok. 


If your dad was giving you the money in order to stop somebody else legally getting it, that could be a problem.

For example,

• He's insolvent -  he has huge debts and  is about to go bankrupt, and is giving you the money to avoid it going to his creditors
• He's likely to go into care soon - so he's giving away his money so that the council have to pay his care costs
• He's divorcing - so he's giving away the money to stop it forming part of the divorce settlement

But hopefully, none of those apply.