PLEASE READ BEFORE POSTING

Hello Forumites! In order to help keep the Forum a useful, safe and friendly place for our users, discussions around non-MoneySaving matters are not permitted per the Forum rules. While we understand that mentioning house prices may sometimes be relevant to a user's specific MoneySaving situation, we ask that you please avoid veering into broad, general debates about the market, the economy and politics, as these can unfortunately lead to abusive or hateful behaviour. Threads that are found to have derailed into wider discussions may be removed. Users who repeatedly disregard this may have their Forum account banned. Please also avoid posting personally identifiable information, including links to your own online property listing which may reveal your address. Thank you for your understanding.

Gifting money towards a house purchase to a family member

2»

Comments

  • Albermarle
    Albermarle Posts: 21,914 Forumite
    First Anniversary First Post Name Dropper
    Reader18 said:
    We have recently done this and made a substantial gift of money  to help with a house purchase. It’s very straight forward, you give the money accompanied by a letter that says it’s a gift and you have no interest in the property. We also had to give photo copies of passports and proof of address with out council tax account.  If we live for 7 years then our adult child will not pay any IHT on the gift. It’s also worth remembering you and your spouse (I’m making an assumption here so forgive me if incorrect) can give your child 3 k each in a given tax year and as a one off, can also give 3 k each for the previous tax year so eg in this financial year you could give a 12 gift with no tax implications. 
     If we live for 7 years then our adult child will not pay any IHT on the gift. 

    IHT rules are widely misunderstood.

    Only in relatively rare circumstances would a recipient of a gift have to pay any IHT on it.

    Firstly your estate ( the giver) would have to be big enough to be actually liable for IHT . As you appear to be married, then in fact your estate would not be liable for IHT until the second death, and then have to be worth more than £650K + another £350K if your home is left to your children.

    If your estate was liable for IHT then the gift would have to be over £325K before the receiver of the gift was potentially liable for IHT on your estate. In practice the estate would normally still pay this in most circumstances.

    If you die within 7 years the gift will be counted back into your estates IHT calculations, and your estate would pay any IHT due, not the person receiving the gift.

    As I understand it for a married couple in fact you would both have to die within 7 years for this to happen.
  • Reader18 said:
    We have recently done this and made a substantial gift of money  to help with a house purchase. It’s very straight forward, you give the money accompanied by a letter that says it’s a gift and you have no interest in the property. We also had to give photo copies of passports and proof of address with out council tax account.  If we live for 7 years then our adult child will not pay any IHT on the gift. It’s also worth remembering you and your spouse (I’m making an assumption here so forgive me if incorrect) can give your child 3 k each in a given tax year and as a one off, can also give 3 k each for the previous tax year so eg in this financial year you could give a 12 gift with no tax implications. 
     If we live for 7 years then our adult child will not pay any IHT on the gift. 

    IHT rules are widely misunderstood.

    Only in relatively rare circumstances would a recipient of a gift have to pay any IHT on it.

    Firstly your estate ( the giver) would have to be big enough to be actually liable for IHT . As you appear to be married, then in fact your estate would not be liable for IHT until the second death, and then have to be worth more than £650K + another £350K if your home is left to your children.

    If your estate was liable for IHT then the gift would have to be over £325K before the receiver of the gift was potentially liable for IHT on your estate. In practice the estate would normally still pay this in most circumstances.

    If you die within 7 years the gift will be counted back into your estates IHT calculations, and your estate would pay any IHT due, not the person receiving the gift.

    As I understand it for a married couple in fact you would both have to die within 7 years for this to happen.

    Quite agree.
    I think the thing more likely to happen would be deprivation of assets if the giver were to need care home in the next X years and didn't have any money to pay for it.
Meet your Ambassadors

Categories

  • All Categories
  • 342.9K Banking & Borrowing
  • 250K Reduce Debt & Boost Income
  • 449.6K Spending & Discounts
  • 235K Work, Benefits & Business
  • 607.7K Mortgages, Homes & Bills
  • 172.9K Life & Family
  • 247.7K Travel & Transport
  • 1.5M Hobbies & Leisure
  • 15.9K Discuss & Feedback
  • 15.1K Coronavirus Support Boards