Making a gift can be a great way of helping a first time buyer with a deposit thereby reducing the need for such a large mortgage. There are any number of ways of raising the cash for a deposit which can be 'gifted' to a child for their first home. We cover these in the 'helping with a deposit' section of our 'How Parents can Help' guide.
Many parents and grandparents try to avoid Inheritance Tax (IHT) by making a gift of a deposit or even a property to their children or grandchildren while they are still alive. But this does not necessarily mean avoiding tax altogether – it could simply be the case that you are hit with a different one. It is a good idea then to ensure you are aware of the present or future tax implications of any gift you make to your child, whether in the form of cash or bricks and mortar. If you are thinking of making a gift, definitely seek tax advice. Another way of providing a gift is by tapping into your pension: Seek pensions advice about how you can use your persion to help.
Essentially you are able to give an amount of money each year without tax effect but otherwise gifts can be taxed if made over within 7 years of the benefactor's death.
More Information about Parental Help for First Time Buyers
Helping with a deposit l Helping with the mortgage l Tax Implications of parents helping children l Legal Implications of parents helping children l Seeking out the right financial advice
- If you are making a gift, you may well want inheritance tax (IHT) advice
- Request mortgage advice regarding how parents can help with mortgages
- Ways of raising a lump sum for making a gift
- Seek pensions advice about how you can use your persion to help
- Contact a professional advisor about secured loans , equity release or remortgaging to help your child out
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