Deposit for a house gift

Dear kind forum people,

What are the tax implications of a parent gifting a deposit for a house? Does it impact inheritance tax?

What if a parent buys a house in full and transfers to a child?

Any words of advice?

Many thanks!

The answer depends on where you are (US or UK) and whether or not this is a single person or a married couple making the gift.

If in the UK then there is no limit to how large the gift is and no reporting is required but a 7 year clock starts running on inheritance tax. (IHT)  If you die within 4 years of making the gift then that gift may be subject to 40% tax depending on the size of your estate. The potential IHT then goes down by 10%/year until after year 7 it is zero and the gift is never considered again.

Thanks for the reply! Parent is in US contributing to my wife who’s  a dual citizen and we are taking a joint mortgage.

Is that subject to IHT? Is there any limit to the amount given?

Thanks for the reply! Parent is in US contributing to my wife who’s  a dual citizen and we are taking a joint mortgage.

Is that subject to IHT? Is there any limit to the amount given?

It doesn’t affect IHT in the slightest bit. The receiver of gifts never has any reporting or tax to pay.

The parent in the US can gift $19k/person/year with no reporting requirements. That would mean a married couple could contribute $38k/person/year without any reporting requirement.  Above that the gift would need to be reported to the IRS using form 709 and would be deducted from the lifetime limit of $13.6m (double that for a married couple)

https://www.nerdwallet.com/article/taxes/gift-tax-rate#:~:text=For%202025%2C%20the%20annual%20gift,gift%20tax%20limit%20of%20%2438%2C000.

Thanks. So what makes it not applicable for IHT? What if the parent buys the house in full and then transfers it? Does that attract IHT?

Thanks. So what makes it not applicable for IHT? What if the parent buys the house in full and then transfers it? Does that attract IHT?

The parent, from what you say, lives in the USA so is not a UK resident and therefore not liable to UK tax, including IHT, at least that is my understanding. 

We have actually gifted our son enough money for him to buy a house in the UK, and reported it to the IRS using form 709.  That was 8 years ago.  We initially thought about buying the house for him and transferring the title but it was MUCH cheaper for him to buy the house himself as it was his first ever house purchase so had zero stamp duty to pay.  If we had bought the house ourselves we would have had to pay the higher stamp duty levied on second homes.

Your spouse will be receiving a gift. Your spouse's assets will be increased. At your spouse's death, there may be UK IHT payable.

Thanks both! Much appreciated

Somewhat related - any recommendations for a UK-US tax advisor ?

It might be helpful to consult on a few different matters how best to execute this

Thanks both! Much appreciated

Somewhat related - any recommendations for a UK-US tax advisor ?

It might be helpful to consult on a few different matters how best to execute this

Our firm is a multi disciplinary firm of US & UK accounting, tax professionals & lawyers. We'd be happy to help.