house deposit from family

jessbrown100

Hi, just wondered if someone could clarify something for me. a few months ago i had a conversation with someone (in a pub- hence my memory loss!) about family members being able to give a certain amount of money to home buyers as a deposit without this money being subject to inheritance or capital gains tax. unfortunately that's all i can remember about the conversation and all web searches that i've done have been useless as i don't know the name of this piece of legislation (if in fact it exists and isn't just 'pub-talk'!) . if any one could help i would be very very grateful as it would help our current situation no end.
thanks in advance!
jess

Fruity1

You may like to try the house buying renting and selling forum you may get a better response.

barnaby-bear

jessbrown100 wrote: »

Hi, just wondered if someone could clarify something for me. a few months ago i had a conversation with someone (in a pub- hence my memory loss!) about family members being able to give a certain amount of money to home buyers as a deposit without this money being subject to inheritance or capital gains tax. unfortunately that's all i can remember about the conversation and all web searches that i've done have been useless as i don't know the name of this piece of legislation (if in fact it exists and isn't just 'pub-talk'!) . if any one could help i would be very very grateful as it would help our current situation no end.
thanks in advance!
jess

Family are allowed to give you cash lump sums free of IH of £3k a year and £5k (or was) on the event of a marriage that becomes instantly yours without the 7 year rule so get married on the 5th of April and your family can gift you £11k tax free regardless of how long they survive over that weekend... just make it a quickie at the registry office:rotfl:

jessbrown100

Ok, thanks for moving me- wasn't sure which forum to post on so took a guess!. thanks for all the responses- guess the deposit thing must have been a figment of my imagination (or pub nonsense!). the wedding thing is a bit late for us but handy to pass on to friends that are getting hitched! thanks

merlinthehappypig

The advice you have had so far is correct.

It's quite straightforward, unusually so for anything in our tax system. Your relatives can give you whatever they like, for any reason. If they survive 7 years after the gift then it is completely free of Inheritance Tax. If they die within 7 years the gift gets counted as part of their estate for IHT purposes on a sliding scale.

This, of course, is only an issue if their estate is over £300000 or £600000 for married couples.

The smaller gift amounts described above are free of IHT anyway. There are no other tax implications for you.

You may have to declare the source of the deposit to the bank or building society from whom you are having the mortgage. This isn't a problem. At worst your family members might have to sign something to say that they don't have an interest in the house that you are buying (otherwise they could argue that they own some of it, having paid the deposit).

harryhound

One more quick thought.
I don't know the exact limits but if you suddenly pay an unusual 5 figure sum into your bank, the bank must write to you to ask where you got it.
Doing part time laundry is not the answer they are hoping to get.

jessbrown100

Thanks for the information everyone!