Gifted Deposit and the amount of tax I am liable for.

damodee

Hi Everyone, need some advice or pointing in the right direction

I'm purchasing from my father his bungalow which he has lived in prior to me buying it for the last 3 years. We agreed on £190,000. My mortgage will be £96,000 (which is what he ows on the mortgage). So therefore he will be gifting me the remainder as a deposit in the total of £94,000. Clearly this money I'm gaining however I have spent nearly £35,000 modernising it with his help, hence the valuation now of £160,000.

Anyone know how much Tax I will have to pay once the mortgage completes?

Damian Greensill

kingstreet

Nil.

The gift is tax free unless your father dies in the next seven years then it will be added back to his estate for inheritance tax purposes but a tapering scale is applied to determine the tax due if he will no longer reside in the property.

If he will continue to live there, the gift never leaves his estate as it falls foul of the gifts with reservation provisions. On death, it may become taxable subject to the overall estate value.

damodee

Thank you Kingstreet, I sincerely appreciate your response, great news too!