Awkward Abbey Mortgage Q

[chef]

many thanks folks,

some useful advice

[ASB]

not contract related but I thought i'd pose the q to the panel:

Situation
- Sister wants to buy a property for £130k
- sister has a mortgage arranged (abbey national) for 90k

Question
If i gift my sister 40k as a deposit on the mortgage, will she have to pay tax on the money received? I am assuming so, is there any other way around it?

I trust my sister and dont need a legal setup, joint ownership of the house or anything like that, i simply want to give her 40k as I'm a nice brother.

Abbey are saying that i cannot gift her the money as i will have a claim of ownerhsip over the house.. i cant see what it has to do with them, why do they care where the deposit is coming from initially.

Do you want a brother? I could do with 40k too.

If you gift her 40k then she has no tax to pay. For the purposes of the mortgage etc. it's irrelevant. It's not extra money or borrowed money. It's HER money. Ensure you make sure it is noted as a gift in a document to her - there must be no strings attached whatsoever - otherwise it is a gift with reservation which could cause problems later.

There should be no tax implications on her. However there are tax implications on YOU.

It is a "potentially exempt transfer" for the purposes of inheritance tax. Thus if you survive 7 years you are home free. If you don't then your estate will be assessed for IHT on value of estate at death + 40k less allowances depending on number of years since gift.

If the estate is able to pay the IHT bill then fine. If it is now a bankrupt estate then the revenue can in theory chase recipients of the gifts which were still only PET's at the time of death.

I suggest searching fool.co.uk might be wise.

forgot to mention: If you go loopy next week and need a care home etc then the assessing authorities for care can take the view that you have wilfully depleted your capital, this again shouldn't cause a problem for your sister - they will just assess your contribution as though you still had the 40k.

[Spacecadet]

can you not 'loan' the money?... surely there must be a way, think of how many parents give their kids loads of money to help them on the property ladder??

Mortgage application asks where any extra money is coming from and if any of it is loaned.

I think you'll need to give her the £40k simply as a present (not specifically for the house).

There seems to be no tax implications as long as you survive for over 7 years after gifting her the money
http://www.taxationweb.co.uk/forum/discuss.php?id=9861

[NotAllThere]

not contract related but I thought i'd pose the q to the panel:

Situation
- Sister wants to buy a property for £130k
- sister has a mortgage arranged (abbey national) for 90k

Question
If i gift my sister 40k as a deposit on the mortgage, will she have to pay tax on the money received? I am assuming so, is there any other way around it?

I trust my sister and dont need a legal setup, joint ownership of the house or anything like that, i simply want to give her 40k as I'm a nice brother.

Abbey are saying that i cannot gift her the money as i will have a claim of ownerhsip over the house.. i cant see what it has to do with them, why do they care where the deposit is coming from initially.

There may be rules about tax free gifts between connected persons. But AIUI, so long as you don't die within 7 years of making the gift, there's no tax to pay.

[pmeswani]

can you not 'loan' the money?... surely there must be a way, think of how many parents give their kids loads of money to help them on the property ladder??

I was thinking along the same lines. How you negotiate the repayment with your sister is entirely up to you. £133.33 a month for 25 years with a 6 month grace period (negotiated)? I think there is a limit to how much you can gift money to someone without incurring some form of tax liability on someone (or both parties).

[chris79]

can you not 'loan' the money?... surely there must be a way, think of how many parents give their kids loads of money to help them on the property ladder??

[DimPrawn]

didn't she win £40k (tax free) on a scratch card? I'm sure that's what happened.

[daviejones]

Stick it in her mattress...you do not have to tell the bank where you got the money from do you?

[chef]

not contract related but I thought i'd pose the q to the panel:

Situation
- Sister wants to buy a property for £130k
- sister has a mortgage arranged (abbey national) for 90k

Question
If i gift my sister 40k as a deposit on the mortgage, will she have to pay tax on the money received? I am assuming so, is there any other way around it?

I trust my sister and dont need a legal setup, joint ownership of the house or anything like that, i simply want to give her 40k as I'm a nice brother.

Abbey are saying that i cannot gift her the money as i will have a claim of ownerhsip over the house.. i cant see what it has to do with them, why do they care where the deposit is coming from initially.