Buying a property with a gifted deposit
A gifted deposit is a financial gift (usually from a relative of the buyer) that will form all (or part) of the deposit the buyer needs to purchase a property. As the name indicates, the deposit money is given as a ‘gift’ rather than a loan, so the gift giver must have no expectation of repayment or acquiring an interest in the property.
For a buyer, the main benefits of a gifted deposit are that:
it enables you to get on the property ladder;
it reduces the size of the mortgage you will need;
it does not have to be repaid; and
it can be given tax-free (subject to IHT law).
If you are buying property with the assistance of a gifted deposit then our lawyers will need to be given the details of the gift giver so we can contact them in order to ensure that the gift is legal and your own interests are protected. In order to comply with Money Laundering Regulations solicitors are also required to carry out identity checks and see proof of funds.
We will obtain from your gift giver a Gifted Deposit Letter or Declaration confirming that the money is a true gift, that they will not seek repayment from you and that they do not expect to hold interest in the property.
If you are having a mortgage then the gift will need to be brought to the attention of your lender before the mortgage offer is issued. Your lender may have specific forms that need to be completed.
If the gift giver has any queries or uncertainties themselves then they should consider taking independent legal advice – particularly if they are gifting a large sum of money as this could have inheritance tax implications.
