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Where Taxpayers and Advisers Meet

Gifted deposit on second home with non paying tenant

Tingly
Posts:34
Joined:Fri Mar 17, 2017 12:12 am
Gifted deposit on second home with non paying tenant

Postby Tingly » Sat Apr 23, 2022 7:41 pm

Good evening
My elderly brother who is a pensioner faces going into rented accommodation shortly.
He will have about £50,000 left in the bank.

If I were to try and fund a house for him in my name (which would be a second home,) and let him live there rent free, would he be allowed to contribute some of his remaining capital towards the purchase as a kind of ‘gifted deposit’…even though it wouldnt have a mortgage on it.? Would there be some kind of tax to pay? He has no interest in having any kind of ‘interest’ in the property.

I am too old to get a mortgage myself to buy him one, and dont quite have the cash to buy him one outright so would need his contribution.

If he should pre decease me and I should later move into that property, what would be the tax implications be

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Gifted deposit on second home with non paying tenant

Postby maths » Sun Apr 24, 2022 10:20 pm

There is nothing to stop you purchasing a residential property in your name (ie you own it) in part using monies given to you by your brother. As this would be a gift of cash it would be a PET for IHT (may be no IHT to pay depending upon the amount of the gift and how long brother survives post gift).

Alternatively your brother instead of gifting could loan you the monies interest free/or with interest.

He can live in the property rent free. On his death no IHT and you could move in to what is in fact your house.

The above is subject to possible POAT implications. To overcome these better for loan not gift to be made.

Tingly
Posts:34
Joined:Fri Mar 17, 2017 12:12 am

Re: Gifted deposit on second home with non paying tenant

Postby Tingly » Mon Apr 25, 2022 7:49 am

Thankyou so very much for this response.
I am going to investigate this …ie the loan method, so as not to fall foul of any implications re the gift method.
I imagine a solicitor will need to draw up a document for the loan, which is fine.
You may well have just saved an old chap from an uncertain future, so am very much obliged.

maths
Posts:8507
Joined:Wed Aug 06, 2008 3:25 pm

Re: Gifted deposit on second home with non paying tenant

Postby maths » Mon Apr 25, 2022 11:56 am

I know no-one likes paying for tax advice (!) but this forum offers comment/guidance typically based on incomplete facts )not the posters fault) so getting advice on the specific often well worth it.

Re any loan the documentation need literally be very minimal and doesn't require a 10 page document and 15 Appendices !!

Tingly
Posts:34
Joined:Fri Mar 17, 2017 12:12 am

Re: Gifted deposit on second home with non paying tenant

Postby Tingly » Mon Apr 25, 2022 5:36 pm

Thankyou for the point you raise. I shall indeed seek the advice of an accountant now, once i have found one. Mine unfortunately did a disappearing act after 33 years. Was all very odd.


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