Parent's property gift will be taxed

By THIS IS MONEY
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What are the tax implications if a parent gives one of their children money to help buy a house or if they purchase the house, or a share in it, on behalf of the offspring? G.D.

Couple moving house

Leonie Kerswill, tax partner at PricewaterhouseCoopers replies: An outright gift from a parent to a child will have inheritance tax implications.

But provided the parent survives the date of the gift by seven years, it will be a potentially exempt transfer and so fall outside their estate for tax.

Where a parent buys part or all of a property for the child, the key tax consideration is capital gains tax (CGT). In this case, the house is not the parent's principal private residence so they will not qualify for a CGT exemption on their share of any gains on the eventual sale of the house.

If the property is let, then the parent will also have to pay income tax on their share of any rental profit.

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