Parent gifting child money for property

[Mumdiva99]

I know we need to get proper advice on this - but find these boards helpful for advice.

Can a parent gift a child 100k to buy a property without them or the child paying additional tax on the money. (I am aware of the 7 year inheritance tax rule....although if one parent dies the estate goes to the other parent).

If they do need to pay tax - what kind and which party?

Many thanks in advance.
(And I know this is a privilege question... it's not for me - I would love to be in that position!!)

Well, where's the money coming from? I assume that the parent has the money in their savings in which case it's no issue at all. If the parent is receiving it as some kind of income or from the sale of a taxable asset, they'll pay tax on it at that point. There's no tax then to pay once it's gifted on (other than the 7 year rule as you've said)

Sorry, the well at the start of my post sounds arsey when it's not meant to

Great info thanks. Yes the parent has always paid correct taxes.

There is no tax to pay.

If both parents died within 7 years it is counted towards the value of their estate and there may be an inheritance tax liability. The inheritance tax is paid out of the estate. It’s slightly more complicated but that’s the basic situation.

However, should one or both parents need social care either at home or in a care home the £100k gift may be considered deliberate deprivation of assets. There is no limit on how far back a local authority can go back.

Finally, is the child being the property on their own or with someone. If with someone please make sure you get a deed of trust ring fencing the gift for the child.

Why would the child even need to say where that money came from? He or she has it to put towards the deposit. Why would they need to say where it came from? It’s ‘their’ money when it is needed.

Because the bank the mortgage is with will need to see proof of source of deposit. In this case, They will also need a signed assurance that it is a gift, and that the donor has no rights over the property. This is a legal requirement for the lender, under money laundering regulations, and has been since 2017.

Ah ok, I didn’t know that. I received such a gift some years back and the best approach was to get the money into my bank account and never discuss where I got it from. It was my savings, and offering more detail let to more questions.

I appreciate it’s different now.

We were asked for evidence of where all of our deposit money came from and needed MIL to sign something to state that the extra amount from her was a gift.

Thanks, I didn’t know that. Was more opaque in ‘my day’.

What a generous gift!

Wrong, solicitor will want to know where it came from, and they’ll need a signed declaration from the parent stating that it is a gift and that they expect no stake in the property in return.

Yes you will see I have acknowledged above that rules have changed since I was the recipient of such a gift.

Thanks all. We are aware of all the money laundering regs and the need to declare it as a gift.

@IStandWithMaya indeed.....wouldn't we all like this sort of gift!! No such luck for me unfortunately.