Help relative with Mortgage cost (Tax issues)

StarTrekkie007

Hello,
 

Can I help my sister with her mortgage bills by helping pay off some of the principle amount so her monthly payment bill is reduced ? If so, how much can I contribute without tax issues ?

I know in the UK there is a annual "gift" amount you can give without tax implications, but in this case the money does not go into my sisters pocket, but instead to the mortgage company to reduce the amount owned.

So what tax issues come into affect when one relative helps another with a loan/bill ? Is it still considered a "gift" ?

penners324

There is no gift tax in the UK

K_S

StarTrekkie007 said:

Hello,

Can I help my sister with her mortgage bills by helping pay off some of the principle amount so her monthly payment bill is reduced ? If so, how much can I contribute without tax issues ?

I know in the UK there is a annual "gift" amount you can give without tax implications, but in this case the money does not go into my sisters pocket, but instead to the mortgage company to reduce the amount owned.

So what tax issues come into affect when one relative helps another with a loan/bill ? Is it still considered a "gift" ?

@startrekkie007 There is no 'gift-tax' as such in the UK. You could give your sister 100k tomorrow for whatever purpose and there would be no tax payable either by you or your sister. If you die within 7 years AND if your estate is large enough to fall inside the IHT net, then the gift (or a proportion of it depending on how soon after the gift you pass away) may have some tax implication for your estate (not for you or your sister).

On the practical side, if you ask the lender whether someone else can pay into the mortgage they may say no, that it needs to come from your sister's account. But if you simply paid directly using a bank transfer with the right reference, etc. I doubt there's any way they could differentiate.

Also, before making any payment, do check and confirm that either your overpayment won't trigger an ERC or if it does, that it is of a amount acceptable to you/sister.