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

Albermarle

horsewithnoname said:

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. 

People giving gifts to a family member to help buy a property is very commonplace.
It is true that the giver will be asked to sign a document to confirm it is an outright gift, and will have to show where the money has come from and prove their identity. However in most cases these requirements are relatively easy ( I have just done it myself without any problems) although occasionally it can be more hassle if the solicitor is a bit keen, or spots something unusual.

Albermarle

aliasmt8 said:

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 

You are right.
It is not clear that these rules only apply if the estate will actually  be big enough to definitely incur an IHT liability.
If not then all these rules are basically irrelevant.

Yorkie1

aliasmt8 said:

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

Just checking - does that include the value of any property which they still own? (Not sure whether the property sale in Spain was of their only property).

Also, be aware that the EA will probably need to see an audit trail of the money from your parents, including evidencing that it came from a property sale. So they'd need to keep any relevant documents for the money laundering regulations.

Hoenir

Are your parents intending to reside in the property? 

aliasmt8

Yes the 300k includes everything and no they are not looking to reside in my property. They will be remaining in their flat in Leeds. Thanks again.

horsewithnoname

Albermarle said:

horsewithnoname said:

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. 

People giving gifts to a family member to help buy a property is very commonplace.
It is true that the giver will be asked to sign a document to confirm it is an outright gift, and will have to show where the money has come from and prove their identity. However in most cases these requirements are relatively easy ( I have just done it myself without any problems) although occasionally it can be more hassle if the solicitor is a bit keen, or spots something unusual.

Yeah, it wasn’t originally made clear what the position was but now with the change of title, seems it is a “gifted” (or not, that’s still not clear) deposit, and it probably does depend on how keen the solicitor is, but a friend tried to gift money to their child and because they had some foreign transactions, the solicitor wasn’t happy and they lost the house they were buying. 

Yet criminals get away with it of course!

aliasmt8

What exactly is still not clear? They don’t want it back. They don’t want to live in it.

I still don’t really get the distinction between a “gifted deposit” and a “gift” for the same value which I intend to put down as part of my deposit but I’m sure that a distinction must be there for a reason.

It feels like the gifted deposit route would be the way to go as although a few more hoops to jump through with the solicitor and lender it probably looks a damn sight better than £50k appearing in my account in the lead up to a mortgage application.

My last question was whether you open yourself up to a potential CGT charge by going down the Gifted deposit vs gift route if used for the same purpose. As per the rest of the advice online, this seems vague.

Hoenir

aliasmt8 said:

My last question was whether you open yourself up to a potential CGT charge

No you don't.  A gift is made without reservation / no strings attached. This is what the lender will require to be certified. 

user1977

aliasmt8 said:

I still don’t really get the distinction between a “gifted deposit” and a “gift” for the same value which I intend to put down as part of my deposit but I’m sure that a distinction must be there for a reason.

There isn't a distinction. 

silvercar

A ‘gift’ is something you give to someone directly, with no expectation of payback.

A ‘gifted deposit’ you would give to someone for the sole intention of it being used towards a deposit on a property purchase. Often you would pay this directly to the buyer’s solicitor. Again, no expectation of payback.