First time buyer, higher earner and large deposit £180k

poseidon1

Bolt1234 said:

Silver - thank you.  I know its a stretch but son in particular has really found his stride and I am no worries about him and his career.  Yes - will do a Deed of Variation within 2 years of my parents death so it goes directly through to them avoiding any inheirtance tax should I pass within next 7 years (I have no intention of doing so and am still working).  State pension for me kicks in next year too.  Might well defer it if I am still working 

Red flag here which no one has seen fit to comment on is that they are unmarried and jointly entering into a very expensive long term commitment.

As such, there would need to be a trust document put in place just prior to the purchase which identifies the percentage of equity in the property each will acquire as a result of their respective deposits, and what percentage of the rising equity each will acquire from their mortgage payment contributions.

All this presupposes they will buy as tenants in common ( rather than joint tenants), and the trust document is to determine what each will get from the property should the relationship fail and they go their separate ways.

 I suspect OP you would be less than happy for some of the funds you are advancing for your son's deposit to end up with a person who did not ultimately become your daughter in law or bear your grandchildren?

Frankly this proposal seems to be a cart before horse situation in that they seem to be intent on committing themselves to a long term joint financial enterprise, but without making a long term commitment ( via marriage/ civil partnership) , to each other.

DullGreyGuy

poseidon1 said:
Frankly this proposal seems to be a cart before horse situation in that they seem to be intent on committing themselves to a long term joint financial enterprise, but without making a long term commitment ( via marriage/ civil partnership) , to each other.

For some that will be an antiquated view as not everyone aspires to marriage/civil partnerships and it makes their relationship no less committed. 

A friend only got married after 40 years of being together and by which point jointly owning circa £2m of properties. The only reason they got married when they did was because his pension only paid second life benefits to a legal spouse and explicitly didnt pay to "common law". 

ACG

DullGreyGuy said:

poseidon1 said:
Frankly this proposal seems to be a cart before horse situation in that they seem to be intent on committing themselves to a long term joint financial enterprise, but without making a long term commitment ( via marriage/ civil partnership) , to each other.

For some that will be an antiquated view as not everyone aspires to marriage/civil partnerships and it makes their relationship no less committed. 

A friend only got married after 40 years of being together and by which point jointly owning circa £2m of properties. The only reason they got married when they did was because his pension only paid second life benefits to a legal spouse and explicitly didnt pay to "common law". 

I have been with my gf for 18 years. Not married, no intention of getting married. Yet we have a kid and a mortgage. 

She is Irish (or at least has an Irish passport), so I have said I would marry her for a passport... Apparently that isnt as funny as I think it is. 

DullGreyGuy

ACG said:
She is Irish (or at least has an Irish passport), so I have said I would marry her for a passport... Apparently that isnt as funny as I think it is. 

I asked my then fiancée if she was after my Irish passport when she said she would marry me... I was told that wasnt funny either

ACG

So basically its not funny no matter what side of that question your on (or women have no sense of humour?)... maybe we need to marry each other! 

poseidon1

DullGreyGuy said:

poseidon1 said:
Frankly this proposal seems to be a cart before horse situation in that they seem to be intent on committing themselves to a long term joint financial enterprise, but without making a long term commitment ( via marriage/ civil partnership) , to each other.

For some that will be an antiquated view as not everyone aspires to marriage/civil partnerships and it makes their relationship no less committed. 

A friend only got married after 40 years of being together and by which point jointly owning circa £2m of properties. The only reason they got married when they did was because his pension only paid second life benefits to a legal spouse and explicitly didnt pay to "common law". 

Had the couple in your example not married, on 1st death the survivor would have only benefited from a single nil rate band of £325k to shelter the £1 million property value passing to them. The simple expedient of a marriage certificate between them eliminates all possibility of IHT and indeed CGT on assets gifted between them. Hopefully the couple in question did not also consider Wills as 'antiquated'.

Marriage may well be considered an antiquated institution, but the UK tax system chooses to generously reward those who embark down  that path with unlimited tax concessions on death and lifetime asset transfers between them, whilst treating singles who merely choose to live together (no matter how long) as unrelated strangers for tax and indeed intestacy purposes.

In this regard and contrary to continually held misconceptions there is no such thing as 'common law spouses', so singles building up substantial joint assets over their lifetimes should think very carefully if they fancy the idea of HMRC being a major beneficiary of their partner's largesse on 1st death.

Bolt1234

Thank you all. I will of course be ring fencing his large deposit.  They are both aware this will be happening.

Yes, in my day it was marriage before all of this 

user1977

Bolt1234 said:

I will of course be ring fencing his large deposit.

By doing what? The mortgage lender isn't going to treat it as a gift if you've still got strings attached.