Taxation Question around gift of money and purchase of property

Hi Folks

Take this scenario, I have been living in a relatives home for the past three years along with my partner and young daughter, my relative has been in a nursing home since i moved in and relative has recently passed away. I am the sole beneficiary of the will which includes the property we are living in.

My issue is that myself and my partner are splitting up so i have been weighing up the options of what to do next

Option A. Sell property I have inherited, gift a sum of money from sale of house to my partner so she can buy a home for herself and my daughter. The issue with this option is that the tax threshold to my partner is low so a large amount will be taxed at 33% however if I gave say 200,000 in my daughters name which would mean no tax implication and then say partner found house for 350000, 200000 would be my gift then partner would make the 150000 up herself, is something like that an option here, how would that work with banks to buy the home that way?

I would be grateful for any insight

I would be reluctant to make a gift of this size to your ex partner.

Could you purchase a home in your name and allow her and your daughter to live there? Potentially charge small amount of rent to cover whatever expenses there may be.

This will ensure that your daughter has a home and that you have an asset for when your daughter gets older.

Thanks for the reply David, it’s something I didn’t think of, I will be stretched to buy two properties, so the best solution I felt was to make a contribution towards the home and then i would get a small place close by in my own name where we could work out shared parenting, as i see it if i gifted 200000 to partner my understanding there would be that 16250 is the cut off then everything else is at 33% so a huge chunk would be taken whereas if I put the money in my childs name there won’t be a tax implication and then partner will be able to fund the balance to buy property from her own money, I have no issue with the house being in partners name as it will be our daughters primary home.

There's too much involved in all of this to do just as you have said. I would go to a solicitor and have this sorted legally, otherwise who knows what may happen in the future with either your partner or daughter and, possibly your partner will meet someone else.

Curiousmike said:

Thanks for the reply David, it’s something I didn’t think of, I will be stretched to buy two properties, so the best solution I felt was to make a contribution towards the home and then i would get a small place close by in my own name where we could work out shared parenting, as i see it if i gifted 200000 to partner my understanding there would be that 16250 is the cut off then everything else is at 33% so a huge chunk would be taken whereas if I put the money in my childs name there won’t be a tax implication and then partner will be able to fund the balance to buy property from her own money, I have no issue with the house being in partners name as it will be our daughters primary home.

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Would you consider purchasing a home with your ex partner? She could get a mortgage for her portion. You could then gift this to your child down the line which wouldn't attract any tax provided the value was below the threshold for Group A.

I think just gifting the money to your ex at this point would be crazy for a number of reasons. Things may be amicable now but that could all change very quickly.

David thanks again for the reply, this is a good option as i will still have part ownership of the asset so not just giving money away which will then be inherited by my daughter in the future, I will also seek legal advice but have always found this forum a great resource of information, this is all quite new so Im still working through the options, thanks again, much obliged

Why not purchase a share of the new property? Or lend her the money?