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Helping children with mortgage 'won't affect Inheritance Tax'
18 February 2008
Parents can contribute to their children's mortgage without any Inheritance Tax implications according to financial advisors.
In most cases parents provide their children with a lump sum for the deposit, and this contribution will not have any repercussions for Inheritance Tax, claimed Peter O'Donovan of Bestinvest.
He said: "Not really, because the property is in the child's name. They pay the stamp duty. Even when the parent uses their income to assist [with mortgage payments], the mortgage might be in three names but the property will just be in the child's name.
"So there shouldn't be any issues that way."
Currently, Inheritance Tax is charged at 40 per cent on all individuals' estates exceeding £300,000, including property, which are in the sole name of the deceased.
A recent study revealed that first born children are more likely than their siblings to receive financial assistance towards a home purchase.
However while 17 per cent of first-borns get help with buying their house compared to 12 per cent of second-born children, second-born get an average of £7,899 compared to their older sibling's £3,346.
