Gifting Money to Children for Property: What Parents Need to Know

With property prices continuing to soar, many parents are stepping in to give their children a helping hand. A financial gift can be a fantastic way to support them – but it’s essential to get everything right. Here’s what you need to know, before you write that cheque!

What Do Parents Need to Provide?

A Gift Letter

Most mortgage lenders will accept gifts from immediate family members, and require a signed formal letter confirming that the money is a gift and not a loan.  This protects the child from future repayment obligations, reassures the lender that the funds won’t affect affordability and acknowledges that the giftor will have no claim, charge or rights over the property.

Proof of Funds

Solicitors and lenders must comply with anti-money laundering regulations, so be ready to show your bank statements and other documents, showing where the money came from.

Consideration of Inheritance Tax (IHT)

Gifts made during your lifetime may be subject to IHT if you pass away within seven years of making them. Keep clear records of when, how much and to whom you made the gift – this is essential for future estate planning.

Legal Protection for the Gift

If your child is buying with a partner, consider a Declaration of Trust. This legal document helps protect your gift if the relationship breaks down or the property is sold.

THIS IS THE BIGGEST PURCHASE YOUR CHILD HAS EVER MADE – PROTECT IT WITH A WILL!

Wrapping up

Helping your child buy a home is a proud moment and probably one of the biggest financial steps they’ll ever take. Make sure everything is done properly. From drafting Gift Letters and Declarations of Trust to drafting Wills, Bridger’s Law are here to make the process, smooth, stress-free and legally sound. Clear, friendly advice, to help protect your gift and your loved one’s future.

Looking for more answers?

We’ve got plenty of helpful guides on our website to support you with whatever stage you’re at and if you’d rather talk things through, our team is always just a phone call away.

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