Gifting money

[Shehasadiamondinthesky]

I'm buying a house with my son as he can't get on the housing ladder. He's a first time buyer so we have been talking about me selling my house and gifting the money to him so he can buy as a first time buyer. however I have heard that mortgage companies will not accept gifted money as it's not income, he'd need another £50-100k on top which him and DiL can easily afford as they both work, fairly basic jobs but they would qualify and have saved up 20k as a deposit. I'll be moving into a granny annexe at the house.
I only have one child, he is 40 and want to make sure if I need a nursing home they don't sell my home to pay for it leaving my son with nothing after I'm gone.
I'm still working full time so still young enough to gift everything I have so they have a future.
Can anyone see any pitfalls.
I absolutely trust my son we've lived together many times over the years.

Gosh, you want to have your cake and eat it too - avoiding stamp duty AND care home fees.
What happens if your son gets divorced?

They accept gifted money, but it has to be a pure gift i.e. not a loan or any other strings attached.

Agree with pp, if your son gets divorced his wife will likely get half the house. There is probably some complicated way you could ring fence it with an irrevocable trust but the bank might take issue with this and you would need legal advice anyway.

Gifts have to be without strings. Living with him is a big “string”.

The bigger problem is what happens if your son divorces?

I only have one child, he is 40 and want to make sure if I need a nursing home they don't sell my home to pay for it leaving my son with nothing after I'm gone.

I don't think you can avoid paying for care if you can in a care home.

What the hell? If you're selling your house to buy one with a granny annexe - your son and DIL should be in the annexe. No way should you put the house in their name if you're putting the majority in.

If you go ahead with your plan, your son might get divorced and then 50% of the house goes to your DIL.

I think this would still count as deprivation of assets should you need care in the future and there is no time limit for money to be claimed from an estate.

How does your sons wife feel about you living with them? Do you all have the same expectations on what it’ll be like and how much you’ll be round?

You can gift deposits, you’ll have to sign a form to say it’s a gift and you don’t expect anything back. If you gift over 50% of their total deposit, some banks might be a bit iffy, but most are back to their pre-Covid rules on deposits now.

You won’t necessarily avoid care home fees - I’d put that out of your mind. This could easily be seen as a deprivation of assets.

The big question will be what happens if your son separates, or if living with you doesn’t work out for them? I appreciate you trust your son, but this isn’t solely his decision now; and he could end up in an awkward position between you & his wife, if it doesn’t work out.

You’d be better to gift whatever you want to him to use as a deposit, bearing in mind that he’s married so the gift would be split with his wife, and then sort your own living arrangements. If you sell to gift him the money, where will you live?

People who hope that all the care fees will be paid by the state don’t realise that will mean a basic care home which will probably be a bit grotty.
My mother sold her house with my encouragement. It meant she could afford a lovely comfortable, pleasant, upmarket care home for the last two years of her life. I never expected her to have anything left over to pass on. I’m glad she did it.

Seconding the point about care homes - if you have no assets, the council only covers residential care home fees to a certain level. You don't get to pick a care home and just expect to have everything covered - I'd think very carefully about trying to deliberately impoverish yourself. You could end up somewhere very grim.

Gifts are fine as long as they are genuine gifts - eg not a loan in disguise or an agreement where you have any claim on the property. My parents gifted me a sizeable chunk and just had to write a letter confirming those things. It means the mortgage company doesn't need to worry that if it has to repossess it, that they would pop up claiming they were owed something.

Your son needs to take some advice from a decent mortgage broker and you need to take some advice separately from independent financial advisor before you go any further with this plan.

If the planned house is big enough to have a granny annex, it must be fairly large. Could they afford something smaller themselves? There is no requirement for them to live in a house - they could be looking at buying a small flat independently

Deprivation of assets only comes into play if there is a reason to think you will imminently need care.

Gifted deposits are fine but you have to sign to say it is a gift with no conditions and you will have no claim on the house.