Parents looking to gift me a deposit contribution towards my next house

k12479

aliasmt8 said:

They are in their mid 70s and have had a few health conditions over the last few years so they are fearful of the dreaded 7 year IHT rule if things go south.

Deprivation of assets is potentially something to also think about.

aliasmt8

Not going to lie. I just had to Google that 😆

It feels like the gift is the best way forward. They were originally keen on investing more but it’s important to me that I can always get the money back out should it ever be needed.

Very unlikely scenario but it gives me a bit of comfort.

Albermarle

aliasmt8 said:

Their estate is probably only £300k max if that helps 

So they will not pay any IHT anyway, so the whole discussion about gifts and 7 year etc is irrelevant.

For some reason ( probably the way it is reported in some sections of the media) many people totally misunderstand how IHT and gifts work. Luckily for you it has all been clearly explained in the posts above

The key/simple message to your parents is that they can never incur more IHT by giving away money, and in any  case they will not even be liable for IHT at all as their assets are not large enough.
They are not alone by worrying about /hating IHT, when in fact they will never have to pay it.

However one point not mentioned is that if they need care ( at home or in a care home) , they can not just give away all their money and expect the council to pay. It is called Deprivation of Assets.
Of course in your case they will still have money after your gift and they might never need care anyway, or at least not the most expensive sort. 

aliasmt8

This kind of thing doesn’t help: https://www.gov.uk/inheritance-tax/gifts. I appreciate that I’m ignorant to it all though so really appreciate all of your advice 

elsien

Ref the suggestion that they will be part owners - you  have already pretty much ruled that out, but just in case it reappears, if they do need care  at any point in the UK, their share of your house because they are not living in it, would count as an asset in any financial assessment. You might need to be buying them out at that point.

aliasmt8

Thanks so much for all the help guys.

One last consideration. Is there likely to be any Capital Gains tax liability which I would incur?

Hoenir

aliasmt8 said:

Their estate is probably only £300k max if that helps 

Is tying up money in your property actually beneficial to them. Investing sounds like they want a return on their money. 

aliasmt8

They aren’t looking for any return.

They just have it to spare and would just rather see me use some of the inheritance while they are still around to see it.

horsewithnoname

It’s a home, not an “investment”. 

If they gift you a deposit or any part of the money they give you (is it really a gift, since you talk about them investing?) then do you realise the amount of scrutiny it’ll come under to make sure it isn’t “dodgy”. If you can afford to buy a home without it, that would be easier. 

aliasmt8

Ok. I’ve updated the post title to better reflect the situation.