Gifting money to kids ?

[BIGDOG]

This.

Gift it to your daughter in advance and then it becomes savings, for her to do as she wishes. No need to tell the lender if she chooses to use it for the purchase of the house.

Some lenders want to see the accrual of funds, however, most will leave it to the conveyancer to confirm source of funds.

I’d be wary of hiding the gift on a mortgage application as it’s fraud which is, of course, a criminal offence. The gifted deposit letter really is no big deal in comparison.

 

[MikeInWimbledon]

Depending on the size of the gift, a trust could be overkill.
£50k ? Barely worth it.
£500k: maybe worth the overhead

I’m still more worried about what happens to her half of the house when she kicks her Blokey out

 

[PXW]

I’m still more worried about what happens to her half of the house when she kicks her Blokey out

I get the concern, and my IFA contacted me to make exactly this point when we helped PXW Junior and his wife in this way.

Perspectives will inevitably vary, but our line was that a gift is a gift, that although it was paid to his account it was intended to help them jointly to set
up home and whatever befell down the line would befall and we didn’t want to try to control the financial impact of that outcome. It helps of course that we know our d-in-l very well and love her dearly, so are not in the slightest worried that she might somehow “profit”’from this arrangement.

 

[clk320x]

Some lenders want to see the accrual of funds, however, most will leave it to the conveyancer to confirm source of funds.

I’d be wary of hiding the gift on a mortgage application as it’s fraud which is, of course, a criminal offence. The gifted deposit letter really is no big deal in comparison.

That’s what’s wrong with this country, a dad can’t even do something nice for his daughter without jumping through a million hoops.

Inheritance tax itself is the biggest scam ever. Work hard, paying the relevant taxes whilst earning, then your kids are taxed on whatever you leave for them when you go… Disgraceful.

 

[KennyN]

This.

Gift it to your daughter in advance and then it becomes savings, for her to do as she wishes. No need to tell the lender if she chooses to use it for the purchase of the house.

Going to have a sit down chat with her later today and set out a few parameters should we decide to move this forward , still a few "grey" areas that need to be cleared up.

Last year they negotiated a three year deal with her landlady , so we need to see how that works.

They have spoke about moving abroad at some point so no point committing to a 35 year mortgage if this is on the cards in a few years.

The DIY "thing" on a refurb project is a serious financial concern , especially if you dont know one end of a paintbrush from the other and need to pay for work to be done at London rates along with paying a mortgage and any other financial unforeseen surprises.

To be fair she is pretty good with her money and has maxed out her help to buy ISA and they have accumulated around £20k in savings over the last few years.

K

 

[Bobby Dazzler]

Some lenders want to see the accrual of funds, however, most will leave it to the conveyancer to confirm source of funds.

I’d be wary of hiding the gift on a mortgage application as it’s fraud which is, of course, a criminal offence. The gifted deposit letter really is no big deal in comparison.

It’s not hiding the gift. I personally wouldn’t hide anything from anyone in a formal context such as this. Up front and open is always best. I’m not sure this would be considered fraud.

Buying a house is an expensive business, whether the receiver uses it as part of the deposit, to pay for moving costs like conveyancing, removals, stamp duty, renovations, or using it for the deposit is completely up to the the receiver.

If it’s more straight forward then the giver could say to that the gift is to cover the cost of all other expenses so the receiver can put all of their prior savings into the mortgage.

Tye lender will almost certainly ask for evidence that they can pay the deposit and have sufficient funds for moving costs and stamp duty, and they may ask for how they have accumulated it.

As long as the receiver doesn’t lie then I can’t see how there is any potential for actual or perceived fraud. To be clear to the OP, I am not an expert in this field, just common sense.

 

[MikeInWimbledon]

That’s what’s wrong with this country, a dad can’t even do something nice for his daughter without jumping through a million hoops.
Inheritance tax itself is the biggest scam ever. Work hard, paying the relevant taxes whilst earning, then your kids are taxed on whatever you leave for them when you go… Disgraceful.

Socialism, guv.

Levelling up. You tax those foolish enough to work (and declare income), then tax them if they spend or save, and then tax them when they expire.

We get what we vote for.

(Cough - of course most avoid Inheritance tax. - Yes, Mr Clarkson, we're talking about you. - It's only the wealthy who die suddenly prematurely who get the big kicking. )

 

[MikeInWimbledon]

Going to have a sit down chat with her later today and set out a few parameters should we decide to move this forward , still a few "grey" areas that need to be cleared up.

Last year they negotiated a three year deal with her landlady , so we need to see how that works.

They have spoke about moving abroad at some point so no point committing to a 35 year mortgage if this is on the cards in a few years.

The DIY "thing" on a refurb project is a serious financial concern , especially if you dont know one end of a paintbrush from the other and need to pay for work to be done at London rates along with paying a mortgage and any other financial unforeseen surprises.

To be fair she is pretty good with her money and has maxed out her help to buy ISA and they have accumulated around £20k in savings over the last few years.

K

Go through the transaction costs carefully going in and coming out.

It's really stupid these days to buy and sell within a decade. The capital growth is poor and the transaction costs are painful.

 

[KennyN]

Go through the transaction costs carefully going in and coming out.

It's really stupid these days to buy and sell within a decade. The capital growth is poor and the transaction costs are painful.

This is my concern , i would rather see them sitting out the remainder of the 36m rental agreement then having a plan at the end to either settle down or move on elsewhere without have the added hassle of selling a house.

At the end of the day it is their decision , we can only be there for them should it not go as planned.

K

 

[BIGDOG]

That’s what’s wrong with this country, a dad can’t even do something nice for his daughter without jumping through a million hoops.

Inheritance tax itself is the biggest scam ever. Work hard, paying the relevant taxes whilst earning, then your kids are taxed on whatever you leave for them when you go… Disgraceful.

It’s a one page form. Name, relationship, tick a box, sign and date.

Not much of a hoop really.

 

[KennyN]

To conclude this :

Had a big person chat with the daughter last night and she has seen sense and is waiting on her 36m rental agreement to expire (18m left - how time flies) before they make a buying (or not) decision.

Her company's head office is in Sydney so that may be an option in a year or so and if it is then selling a recently purchased property is hassle that they dont need at that time should they make the move , not to mention the money they would loose.

Looks like the Bank of M + D is safe for the moment so better get the M4 Comp bought sharpish.

K

 

[MikeInWimbledon]

To conclude this :

Had a big person chat with the daughter last night and she has seen sense and is waiting on her 36m rental agreement to expire (18m left - how time flies) before they make a buying (or not) decision.

Her company's head office is in Sydney so that may be an option in a year or so and if it is then selling a recently purchased property is hassle that they dont need at that time should they make the move , not to mention the money they would loose.

Looks like the Bank of M + D is safe for the moment so better get the M4 Comp bought sharpish.

K

That’s a very lucky girl.

An easy path into international transfer and residency.

Not so great for the Old Ones but an opportunity that she’d be crazy not to take

 

[KennyN]

That’s a very lucky girl.

An easy path into international transfer and residency.

She is , as is her partner who works for a French company that make / manage / repair low level satellites around the entire planet so i am sure there are opportunities doon under for his skill-set.

Its going to be a very empty home if she does as the boy has just blagged a job with Royal Caribbean and is heading off to Florida at the end of the month for a six month stint on the Harmony of the Seas.

At least the holidays for the foreseeable future are taken care of , Aus or a discounted trip with RC.

K

 

[Pontoneer]

I am sure there are a few on here that have been in a similar situation regarding their offspring (sponges)

Daughter (28) is looking at getting on the property ladder in London (i know ) , as she has been living there for the last six years and figures that she want to put proper roots down so in order for her to do so a 10% deposit is required for the mortgage as a 100% mortgage would be a bit of a stretch for her and her partner.

So enter the ATM that used to be called mum and dad to fill the deposit void.

If we "gift" her the money for the deposit (more than the allowable £3k) is she liable for any tax implications apart from the seven year rule should we check out before then ?

The bible that is Google and the HMRC states that gifts are not taxable (although any income on interest will be) which i find strange as moving large(ish) sums of money around and into property without implications seems to be a money launders dream.

TIA - K

Other option on this may be for you to put down the deposit , and become part owner of the property in whatever percentage your stake forms of the entire thing .

Then , in line with inheritance rules , I believe you can gift or transfer so much to them each year without any liability for taxes ( I know that's what my mother did with her own house , and transferred it to my sister who lived with her , a certain amount each year over a number of years ) .

 

[BIGDOG]

Other option on this may be for you to put down the deposit , and become part owner of the property in whatever percentage your stake forms of the entire thing .

Then , in line with inheritance rules , I believe you can gift or transfer so much to them each year without any liability for taxes ( I know that's what my mother did with her own house , and transferred it to my sister who lived with her , a certain amount each year over a number of years ) .

If Kenny is an owner then the mortgage term is limited to his retirement age. May be a bit short.

 

[Pontoneer]

If Kenny is an owner then the mortgage term is limited to his retirement age. May be a bit short.

Mortgages with full life options aren't that unusual now , besides , if he isn't borrowing , why should it matter ; if he dies while the mortgage is still being paid back ( sorry Kenny ) why should it matter ? He has already paid his full contribution so no one else loses out .

 

[BIGDOG]

Mortgages with full life options aren't that unusual now , besides , if he isn't borrowing , why should it matter ; if he dies while the mortgage is still being paid back ( sorry Kenny ) why should it matter ? He has already paid his full contribution so no one else loses out .

If Kenny is an owner then the mortgage term is limited to his retirement age. May be a bit short.

 

[KennyN]

If Kenny is an owner then the mortgage term is limited to his retirement age. May be a bit short.

@57 i bloody hope not

K

 

[BIGDOG]

@57 i bloody hope not

K

Term to retirement.

 

[KennyN]

Term to retirement.

-2 years , could have gone at 55 but wasn`t in the right frame of mind to do so.

Luckily i didn`t as we explained to the daughter last night that if i had then we would have put a bit of a dent in her house deposit fund.

I could go at anytime if things got worse at work , on the upside of this is that if things got worse there maybe redundancies and with 30 years service and two pensions that would be the time to jump ship into retirement.

K