lending children house deposit

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.

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

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.

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

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'..

Funny how we all cling to the idea of having to treat all our children the same.
Logically, once they are adults, they may be in very different circumstances, and our money is ours to do as we like with.....but old habits die hard!

So what happens to the 'gift tax' then?? I was under the impression that you cannot 'gift' more than £2000 per tax year without the recipient getting charged with this at some exhorbitant percentage! Please enlighten me someone, as I would love to 'gift' my daughter with a deposit to buy a house. I could afford to do this without needing to get in back, but thought that she would be charged the tax on it. Anyone, help please!

Recent court story re. child says it was a gift, parents mortgaged home to lend. Nothing was in writing, hence court case.
Get it formally in writing, and witnessed.

When I divorced I lent my daughter a sum of money for a deposit from my share of the savings we had. When the divorce was finalised because I moved to a more expensive area to be near daughters the when I purchase the flat I did not have quite enough money to buy it outright and had to have a small mortgage. I couldn't have a mortgage due to my age so DD1 guaranteed the mortgage as their mortgage was paid off. DD2 is paying the mortgage as part of her paying off the house deposit I lent her. When she has repaid me there will be a tiny amount left to pay. We then intend to split that 3 ways all of us paying the same so when I die the girls will have a split inheritance exactly the same. It works for us and there is no document around repaying

We couldn't afford to give it as a gift because what we did for one we always did for the other. The amount we invested was £15,000 and there was no way we could have given that amount to him and the same to his brother.

You're right Dolcelatte about having proper documentation drawn up so everyone knows where they stand. We thought we had but I suppose because it was our son, we weren't cautious enough.

If only there'd been an additional 4 words; 'or payable on demand'.

We gave our eldest son and his then gf £2000 for their first house together and had a document drawn up that if they split up the money had to go to him when the house was sold. That was 27 years ago though so things will have obviously changed since then - they are still together and have moved several times since.

If you can't afford to lose the money I would definitely consult a solicitor but it would be better just to give it to your son as a gift if possible.

Smileless and Austin, your situation sounds uncannily like mine, except I didn't go ahead with lending my daughter money in the end. She and BF were going to buy a house with each putting in 50% of the money and DD's share was to be paid by us and protected by a Deed of Trust.

However, I withdrew after BF showed what I thought was controlling behaviour, both towards DD and towards me in the transaction. He was not keen on a Deed of Trust, was reluctant to have a survey, and flatly refused to have any searches done. DD was just happy to let BF be 'in charge', which did not fill me with confidence. His parents therefore stepped in, but insisted on the property being sold and being paid back their money, with a share of profit, two years later.

My relationship with DD has been badly affected by all of this and sometimes I wish I had just given the money, but that would not have been fair to my other DC.

I guess what I am saying is that both in my personal and professional life (barrister), I have seen the rifts that money can cause, usually when a third party becomes involved in the equation ie a spouse or partner.

I am not sure what the answer is, but you are right to be cautious. I would always recommend having clear documentation so everybody knows where they stand. I would also recommend separate solicitors, which gives you the option of saying that your solicitor insists on things being done in a certain way, which depersonalises the situation.

The time to get the agreement in place is at the beginning, when hopefully everybody is clear about and happy about what they are signing up to.

never a lender or a borrower be, if do you get it in writing legally, no exceptions, Take it from one who learnt a costly lesson, no money no contact with children or grandchildren

I give housing deposits to DDs as a gift. Done and dusted.

Good point Situpstraight, that was the mistake we made.

No offence intended Granflower but we made a serious mistake. We had our money in our ES's house covered by a legal document and our percentage share registered with Land Registry.

The documentation states that we would receive either the original sum invested or the percentage value of our share, which ever was the greater, when the house was sold. My brother also invested at the same time. It was our joint investment that enabled a purchase to go ahead as it served as their (ES and his wife's) deposit.

We trusted them implicitly. We had a gentleman's agreement that if we ever needed the money it would be re paid and my brother had a gentleman's agreement that his would be re paid when he reached his 60th birthday, which is in 2 years time.

5+ years ago we found ourselves cut out, my brother too. During a heated meeting with his father, our ES accused us of only investing the money as a means of control so
Mr. S. told him if he really believed that to be the case, that they should pay it back.

I wrote and said in the circumstances ie his refusal to have anything to do with us, that when there was sufficient equity in the house it would be sensible for our money to be re paid.

As things stand, unless we're prepared to go to court more than likely we'll never see our money again. How they can live in a house they'd never have been able to afford without the money from his parents and uncle, that they now refuse to have any contact with is beyond me.

If you cannot afford for this to be an open ended loan, you need a legal binding document which states that your money will be re paid either when the property is sold or on demand.

I can't remember how much the legal expenses were, but they weren't excessive. I do remember that we paid for those as well.

I'm not suggesting that you shouldn't trust your son implicitly Granflower but unless you wish this to be a gift or a loan that may never be repaid, just be careful.

We gave one of our children a deposit for a house, we help the other one financially in different ways, sometimes financial help with his children as well, it's more drips and drabs rather than a lump sum, but we will make sure it evens out. They aren't loans the money we have given them we don't expect it back, I agree with Paddyann give it, if you don't need it back. We were both left money from our own parents and it was always our intention to help our children out as and when. Whilst I know the younger generation can, and ours have been more frivolous than we were at the same age, I acknowledge that taking all that into account, as far as the bigger picture is concerned, things are more difficult today. I do feel an onus to help now in certain instances, instead of making them wait until we are both dead.

I lent quite a bit of money to help out. I had to declare it as a gift to the mortgage provider but I had a deed of trust drawn up by solicitor saying if the house was sold I would get third of the sale price back after expenses. It was a house for all of us and I had an annexe. Well it all fell apart after a couple of years a divorce was in the offing and so glad I managed to get most of my money back on the sale of the house. But I now have a mortgage albeit a small one at the age of 68. I am pretty certain I would have got the money back anyway but best to have it in a legal document.

When you fill in the mortgage application, you have to say where your deposit has come from. If you say gift and it isn’t that is fraud - I agree that you’re unlikely to be caught out but if you ever were, you could be in very serious trouble, especially if you were a regulated professional. Also if you say gift, then the lender could never enforce the debt being repaid anyway.

When my father and FIL died we just shared the legacy (not huge) with our children - it went into their bank accounts and was used as they saw fit. At least one of them used it towards a house deposit - I can't see how anyone (e.g. solicitor/lender) would know what the source of the money was.

I agree with the give don’t lend - if you envisage a situation when you’ll need it back, you shouldn’t lend in the first place.

You never know what is in the future so I would give it to your son now we did this 3 yrs ago for our eldest son and will do again for our 2nd son soon they will have both received the same amount and when we pop off the remainder will be split 3 ways with the boys receiving x£s less than their sister.

The OP has not told us if he is an only child. My friend's mother always gave her two children exactly the same amount. If one was given an item from the house the other was given a cheque to its value. Eg a car was passed on to my friend so her brother was given its value in cash.

Im in the camp of giving.. If you can afford it.

Nae pockets in a shroud!

Be careful. I recently gave my son cash to help with house purchase. Solicitor asked for a letter declaring that it was not needed for deposit. We said that it would be used for the new kitchen and that he was not depending on it to fulfil mortgage lending requirements.

Barclays do a Family Springboard mortgage where you deposit 10% of the purchase price for three years as a guarantor. Other banks might do similar.

Worth looking into.