lending children house deposit

I'm with christalbee, can anyone enlighten? I would like to be able to give my DD a sum of money for a deposit (which she would inherit anyway) but don't know the tax implications as it would be a 'gift'..

If you live for seven years after giving it there is no tax payable. Get a move on!

I agree with Paddyann. If you can afford to give the money then do so. It is better to give to children and grandchildren when they are alive and you can them enjoy it than to leave it when you pass. We gifted my dd money towards house deposit but 2 ds still live at home. In the end we decided to gift them equal amount at same time and both have invested it. Some people do not realise that the value of money changes over time so gifting £10k to dd in 2012 would not be same as gifting ds £10 in 2018. As far as I am concerned I have gifted each child enough for deposit at time of gifting. They wisely invested money so it tries to keep pace with inflation. I have also helped out dd with extortionate nursery fees for dgs. I will do same for any future dgc. Whenever I have lent money to all 3 children for masters degree or car insurance or whatever all has been repaid in full and I trust all children implicitly. If borrowed money had not been repaid in past I would ask for solicitor to draw up agreement.

You can do what you like with your money whilst you are alive (!)
When you die, if your estate is above the inheritance tax threshold, then expensive gifts you have given in the previous 7 years are counted in your estate for the purposes of inheritance tax. This is to stop people suddenly giving their children several £k to avoid inheritance tax. There is also a sliding scale.
Like so much information, all clear on gov.uk:
www.gov.uk/inheritance-tax

The amount of tax liable does go down, on a sliding scale, as the 7 years pass.
We have given our DCs the money for deposits as early inheritance.
You can also gift £5000 tax free to a child when they marry, extra to the £3000 tax free each year.

We have a son and a daughter. Some years ago, our DD and her hubby were desperate for some money (unsuccessful business venture). As we had just sold a property we were able to help we gave them £25,000 with no thought of repayment. We have made our wills so that after the death of the last one of us, , our DS is given £25,000 before the remainder of our estate is divided between them. They both know what we have done and are happy.

See a lawyer. What if he stays there until he dies then his wife/partner would have the money.

You are being as we all are generous with our children to help them when they need it most. However I would suggest that you first ask yourself why you want this money back. Is it to be fair with your other children if you have others? Is it because you feel you might need the cash in the future, since money once gone does not get put back as we get older? Is it that you feel he should pay it back?

Once you establish why you want the money back then you will come up with a solution that you are content with.

Another person posted that you might gift it to him. There may be tax gains in doing that. Another person posted that you might consider it as part of the planned amount you wish to leave him on your death anyway, and if you have other children this amount should be deducted from his share then. This would be fair.

The main thing is make your own mind up. If you make it a loan, and you say you trust your son, then trust him to pay it back. Bearing in mind if he is in a relationship and the mortgage is in two names, that the loan repayment will come out of his share of the profit.

These are all things that need consideration. If you go to a solicitor there will as you realise a cost attached, will that be added to the loan to be repaid, or will your son pay for that now.

A lot depends on how much your loaning, how your loaning it and why your loaning in the first place instead of the other options of gifting. Only you can answer these questions since your tax situation and financial situation will be critical when answering and deciding what is the best course of action.

Good luck with this, I am sure you will come up with the decision that suits you best. I emphasis suits YOU best.

I have 6 children to leave my mobey to so gifting a large amount to one would be out of the question. 3 years ago DD wanted to buy a house with her husband but he had bever had any credit if any sort so had no credit history in order to get a mortgage. I lent then 75% of the cost of the house but my name went in the deeds, a trust deed was drawn up that I wanted the money back in a maximum of two years snd a charge put on the house. 16 months later they were able to get a mortgage. Then I was told it would cost £800 to have my name taken off the deeds and SIL expected me to pay this. On your bike! The house had increased by over £20K in value and he expected me to pay the legal fees. No way. The amount was about 90% if my says so I couldn't afford to lose it. I would have something drawn up about repayment and protect yourselves. One never knows how long their marriage may last and if it came to divorce and nothing was in writing he/she would get half the money you loaned.

Any chance your son could manage the deposit himself to avoid any suggestion of fraud when taking out a mortgage if you "help" him with either a loan or a gift to cover some of the other costs of buying a house and moving?

It never ceases to amaze me how many people are in the position of being able to either lend or donate money to family. It must be wonderful to be able to do so.

Yes, Izabella, it is.
Our family, for 5 generations now, has benefited from a combination of good luck, hard work, good education (by which I mean good state schools, good libraries and encouragement) and careful saving. Not everyone is so fortunate, one reason I feel so strongly about education. But sometimes, it just doesn't all come together.
One of my nieces made a very bad choice of partner (not at all apparent to us at the time) and he stole the money she had been given. She struggles now - her parents help, and I make sure that I give her 'sensible' vouchers for Xmas and birthdays, but it breaks my heart.

I agree with Smiless2012. DH & I had provided free childcare for GC for 3 years, which we enjoyed but towards the looming NC & Narc label (happily unaware of at that time) broad hints for gift of 4k holiday and new cars were coming thick & fast.DH & I had had a small windfall, we are both retired and want to remain comfortable & mortgage free. Within 3 weeks we we were NC & I am a NARC!
DH & SIL have a large detached house & all extra mod cons so they were doing well we thought. Money is often at the root of families falling out.

I am a Justice Of The Peace and I did lend my son and DIL a large sum of money but we had a binding contract.
You must have a contract signed by both parties and witnessed by a third party. Third party must be someone who will not gain by the monetary loan.
They paid me back in full and in record time.

Leant my DD money for deposit then she and boyfriend split up - she walked away - took me a few yrs to get my money back from him with nothing formal ( by solicitor) written, but I did get it in the end. Good for him!
Leant DS money to buy house and have a solictors document re- repayment ( but think of it more as a gift. ) 2nd DS lives in a flat I bought for him to live in when he came down from UNi...
So tried all ways ...to help them as they needed -happy with outcome overall, just sad DD ended up with no home/step onto the ladder, but she's happier now and married!

Can someone enlighten me what a abbreviations NC and Narc stand for (as in Linz17 post)? Thank you.

NC - no contact? but can’t help with NARC I’m afraid

From my time in the US a NARC is a law enforcement officer dealing with narcotics, but I doubt that is the meaning here. Shows how abbreviations can get us barking up the wrong tree.

And yes Nanarose things may not turn out positive despite a good education. Three self funded degrees here and hard work for 40 years as an front line healthcare professional - and still aghast at the sums of money discussed on this thread.

Hello, sorry NARC is the abbreviation for this new 'Narcissist' name that most parents are saddled with when offspring decide they need no more contact with you. It is because you are a Narcissist & according to sites on the web there is a high % of who parents fall into this category. I received a letter from my D who has named me as one of this group!! If you look at the 'relationships' forum you will see unfortunately..

linzyes it's amazing isn't it, how many narcissist parents there are in the world. Strange how so many of us managed to raise our children with love, give them the best start we could in life despite being saddled with this personality defect.

In our case, it wasn't that they wanted what we weren't prepared to give, they'd got all they needed so we were no longer of any use to them.

Oh and of course all that we'd done wasn't done out of our love for our son, just our desire to control him.

Thank you Smiless, Yes you have hit the nail on the head, but howwe have been punished for it! I would post more but I do not want to be identified, as other sites encourage this behaviour and no doubt have a field day showing what an NARC I am!! sunshine

When our daughter needed help in a divorce, to buy her share of the house, she found that the mortgage company would not allow her to have a loan from us (or anyone else) as she was already borrowing as much as they thought she could repay. We gifted her the money, and wrote a formal letter to the mortgage provider stating where we got it from and that it was an unconditional gift.

We already knew at that time that my husband was terminally ill, so I made the gift from my savings, to minimise any chance of inheritance tax being payable. If by any chance I don't last the seven years, she will inherit half of my house and savings, so should have no problem paying any tax due, but now that the IHT threshhold includes an extra amount against the value of the house, it's pretty unlikely that there would be IHT to pay anyway.

Izabella I take your point about being in a position to give money to the offspring.
My mother died 10 years ago leaving me a good, but not huge, inheritance.
Over the ten years I have given it all to my 3 AC.
I now have what's left of my lump sum and savings and have warned them that if need be, they may in the future have to top up my care home fees!

We did give our daughter an amount of money towards her first house and our son the same amount towards his wedding. Both received the same amount just for different reasons.
Clearly if you need the money to be repaid on the sale of the house you need to consider the fact it could be years ahead and you may not be around.

Nanarose- I can’t see how your way of making things fair is fair.
If you give £20,000 to one child in, say 1989, I can’t see that giving your other children the same sum maybe 30 years later is equal. The second £20,000 won’t be worth anything like the first.
We gave my younger D some money to help her buy a flat. We gave our second daughter more 3 years later to put them in the same position.
A lot of posters have stated that they trust their children implicitly. We trust ours too but their partners can be a different matter especially when divorce or separation happens.