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Where Taxpayers and Advisers Meet

Cash gifts

Nicklam
Posts:44
Joined:Sun Jan 19, 2020 1:00 am
Cash gifts

Postby Nicklam » Sun Mar 29, 2020 1:23 pm

If my father was to say gift his house to me. Could i gift him 100k to buy the house he wants somewhere else?
Any issues with doing this? Would hmrc see it as a sale of the house even if i gift cash to him?

AGoodman
Posts:1738
Joined:Fri May 16, 2014 3:47 pm

Re: Cash gifts

Postby AGoodman » Sun Mar 29, 2020 2:26 pm

HMRC could well see it as a sale (otherwise nobody would ever pay stamp duty) because the two transactions are clearly linked.

If you already have a property, you would be looking at £3k in SDLT on £100k. If not, its under the SDLT threshold so makes no difference.

Nicklam
Posts:44
Joined:Sun Jan 19, 2020 1:00 am

Re: Cash gifts

Postby Nicklam » Sun Mar 29, 2020 3:28 pm

Currently Its his main residence and mine to. Plan is if he gifted current property to me say in full and i gifted him some cash to help buy his own property else where. He would also be contributing his own cash towards other property for himself. Im just helping add money on top so he doesn't have to get a mortgage...

Is there anyway of achieving this?

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Cash gifts

Postby bd6759 » Mon Mar 30, 2020 6:46 pm

But it is not a gift. I gift my newsagent £1 every morning and he gifts me a newspaper!

In exchange for your father giving you the property, you will give him £100k. He is selling it to you for that amount. There is nothing preventing him from doing that.

There will be no tax for him to pay if it is his main residence.

There will be no tax for you to pay if you don’t own any other properties.

vik2001
Posts:72
Joined:Sat Nov 17, 2012 2:24 am

Re: Cash gifts

Postby vik2001 » Mon Mar 30, 2020 8:02 pm

If the house is worth 200k and you sell for 100k then its seen you have made a gift of 100k. Im not sure how hmrc will view it

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

Re: Cash gifts

Postby maths » Wed Apr 01, 2020 10:01 pm

The easiest approach is a purchase by you of father's property for the 100k.

Disposal for CGT but as it's father's main residence no actual CGT charge arises.

If market value of the property is in excess of 100k the excess amount will constitute a gift by father and if father continues to live in it then the gift will give rise to a gift with reservation for IHT purposes. As soon as father moves out his reservation will cease and he will be treated as him making a potentially exempt transfer.

If house is worth 325k or less then in practice the reservation of benefit issue will have no real import.

You give father cash 325k which if you have not made any earlier lifetime transfers gives rise to no actual IHT charge.

SDLT arises on your part on the purchase but with consideration of 100K no actual charge arises (I assume you do not already have another property).

SDLT arises on father's new purchase but not the surcharge of 3% (its either initially payable and then reclaimable or simply not payable.


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