Paying house deposits for Daughter

Pike_Freak69

I have two daughters that are both looking to buy houses in their respective locations. My wife and I would like to support them both by contributing to their deposits but utilising the most effective method and minimising any tax. We wish to offer them a reasonable amount, but I believe certain tax rules have changed, I am unsure how to do this.

One daughter is in Scotland, the other in England and again I don’t know if that affects the way we proceed.

 

My wife and I both have separate ISA’s and savings.

I understand that we can only gift £3000 each per financial year, but could utilise the previous years level if not used, giving £6000 each?

Any help would be appreciated.

Olinda99

There is no gift tax in the UK so you can give us much as you want to anyone you want to including your daughters without paying any tax

The only thing to be wary of is that the gift may count towards your inheritance tax allowance should you die within the seven years of gifting the money

Also should you require means tested benefits for example a care home or whatever then giving the money away could count against you but other than this go ahead and give what you want to whoever you want

theartfullodger

In my experience (3 sons, assisted all) you need to sign a declaration the "help" is a gift, not a loan, and you'll own no shares of the kid's properties....

Keep_pedalling

If you gift £6000 each then that is exempt from the 7 year rule so for IHT purposes, but that does not stop you giving more. There are no negative tax implications to gifting, but for those whose estates are in IHT territory will have to survive 7 years for larger gifts to fall out of their estate.

SDLT_Geek

Pike_Freak69 said:

I have two daughters that are both looking to buy houses in their respective locations. My wife and I would like to support them both by contributing to their deposits but utilising the most effective method and minimising any tax. We wish to offer them a reasonable amount, but I believe certain tax rules have changed, I am unsure how to do this.

One daughter is in Scotland, the other in England and again I don’t know if that affects the way we proceed. 

My wife and I both have separate ISA’s and savings.

I understand that we can only gift £3000 each per financial year, but could utilise the previous years level if not used, giving £6000 each?

Any help would be appreciated.

I agree with the comments others have made.

Your daughters will need to prove "source of funds" when they come to buy, so do expect to be asked searching questions about how the savings have accrued.

saajan_12

There's no increased tax as a result of this gift.

You can give as much as you like, no gift tax at this stage. Assuming that the alternative to gifting now is your daughters will inherit the money later -> then if your estate is large enough, there would be 40% inheritance tax on that money eventually. If you give it as a gift before your death then it only attracts (partial) inheritance tax if its within 7 years, so there's a chance there's zero tax rather than a certain 40%. If your estate is below the threshold then it makes no difference. 

dinosaur66

a word of advice for the daughter in scotland ,tell her to make sure that is definatley the property she wants as first time buyers are always a bit naturally skittish .

in scotland if you put an offer in and it is accepted within 2 weeks missives are normally done and if she changes her mind she is legally obliged to pay 10 % of the purchase price .

very good of you to do that for your daughters and as others have said you can give what you want .

as to where the money has come / the bank of mum and dad is the truth and there will be no issues.

 

.

user1977

dinosaur66 said:

in scotland...if she changes her mind she is legally obliged to pay 10 % of the purchase price .

Where are you getting 10% from? Yes, if a buyer is in breach of contract they'll be liable for interest and expenses (and possibly shortfall in the price if it doesn't resell for as much, so possibly a chunky amount) but there's no 10% mentioned anywhere.

silvercar

We’ve done this for both our children.it required a letter to the solicitor saying the money was a gift and we understood we wouldn’t have any stake in the property and there was no expectation of any money gifted being returned. For source of funds, the solicitor accepted that the funds were an accumulation of savings created by excess income over expenditure. I know other people on here have had to jump through more hoops in proving source of funds.