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TonyTax
TonyTax, Tax Consultant
Category: Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I wish to help my son in property purchase say £100k from my

Resolved Question:

I wish to help my son in property purchase say £100k from my own funds. Are there any tax implications in doing this?
Submitted: 2 years ago.
Category: Tax
Expert:  TonyTax replied 2 years ago.
Hi.

Will this be an outright gift to your son or a loan?
Customer: replied 2 years ago.

Depending on tax situation (mine and his) I would prefer it to be an outright gift but if it is a preferable route we would consider it as a long term loan.

Expert:  TonyTax replied 2 years ago.
Thanks.

Leave this with me while I draft my answer.
Customer: replied 2 years ago.

OK awaiting answer thanks.

Expert:  TonyTax replied 2 years ago.
Hi again.

If you make a gift to your son, it will be a potentially exempt transfer and so long as you live for at least 7 years after the date of the gift, it will not be included in your estate for Inheritance Tax purposes. If you die within seven years then the gift value will be included in your estate for Inheritance Tax purposes.

Your son will not have to pay tax on the gift except in the circumstances set out under the heading "When a beneficiary or a 'donee' has to pay Inheritance Tax" here. Taper relief may also apply to gifts made between three and seven years before death as you can read under the heading "Applying ‘Taper Relief’ to gifts" here.

If you lend the money to your son, it obviously won't be a gift unless it is written off at a later date. You would have to pay tax on any interest paid by your son on the loan.

If you took a part ownership interest in the property, you would have to pay Capital Gains Tax on your share of any gain made on a future disposal. Assuming the property was your son's main home, his share of any gain would be exempt from CGT.

I hope this helps but let me know if you have any further questions.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15758
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
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