Tax implications of paying off sister mortgage

fazrewards

Hi all,

I recently sold a property and received the sum to my account. I would like to use the money now to pay off my sisters mortgage which is approx £100k.

Does anyone if there are any tax implications to this and also her lender is Santander, can i pay it off directly or do the funds have to be sent to my sisters account?

moneysaver1978

Unsure about the implications specific to tax but you would need to check with Santander if there are any overpayment fees.

masonic

The only tax implications would be to inheritance tax if you were to die within 7 years of making the gift. It would probably be better to send the funds to your sister's bank account. She may need to provide some information about the source of funds when using them. It is very generous of you to help your sister in this way.

Kim_13

Will your sister be repaying you? Making it a loan would mean no risk of IHT, and as a gift you could charge no interest (meaning no tax for you to pay.)

fazrewards

Thanks all there will be no requirement to repay. Just my follow up question is, do I have to transfer the money to her bank account or can I directly contact Santander to pay it of for her?

Bigwheels1111

fazrewards said:

Thanks all there will be no requirement to repay. Just my follow up question is, do I have to transfer the money to her bank account or can I directly contact Santander to pay it of for her?

Go the old fashioned way, a cheque.

To save any issues, my Dad did this every January.

Same surname, If questioned was easy to say a gift from my dad.

3K per year. Not tax issues.

Santander will not like a large payment in and out in a short period of time.

Even if called and told what is going on, Her account will or may be locked and you will have another post on here

going what can she do.

The answer is nothing.

She can take the cheque in her name into a branch, state I want this paid off the capital for eg.

fazrewards

Bigwheels1111 said:

fazrewards said:

Thanks all there will be no requirement to repay. Just my follow up question is, do I have to transfer the money to her bank account or can I directly contact Santander to pay it of for her?

Go the old fashioned way, a cheque.

To save any issues, my Dad did this every January.

Same surname, If questioned was easy to say a gift from my dad.

3K per year. Not tax issues.

Santander will not like a large payment in and out in a short period of time.

Even if called and told what is going on, Her account will or may be locked and you will have another post on here

going what can she do.

The answer is nothing.

She can take the cheque in her name into a branch, state I want this paid off the capital for eg.

Good suggestion, did not think about cheque. Only concern is if it will be a issue with £100k

xylophone

But will there be the same problem as referenced here

https://forums.moneysavingexpert.com/discussion/comment/80414018/#Comment_80414018

when you proposed giving the money to your son?

xylophone

https://forums.moneysavingexpert.com/discussion/comment/80476159#Comment_80476159

And is the mortgage in your sister's name  or your grandmother's?

Keep_pedalling

Kim_13 said:

Will your sister be repaying you? Making it a loan would mean no risk of IHT, and as a gift you could charge no interest (meaning no tax for you to pay.)

Why do you think this is a risk? If it is a gift then it falls out of the OPs estate after 7 years, if it is a loan it will never fall out of their estate.

Gifting NEVER has a negative impact on your IHT liability.

masonic

xylophone said:

But will there be the same problem as referenced here

https://forums.moneysavingexpert.com/discussion/comment/80414018/#Comment_80414018

when you proposed giving the money to your son?

Yes, the deprivation of assets issue may be the more relevant consideration here. @fazrewards you'd need to be confident that you have sufficient assets left over to provide for yourself and you aren't at risk of needing to claim means-tested benefits in the future.