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Thread: Can my parents write off a loan to me?

  1. #1

    Can my parents write off a loan to me?

    My parents lent me 30,000 to buy my flat in 2008. It is listed as a second charge on the land registry and we had proper paper work drawn up. I don't pay interest - the loan is to be paid off when I sell the property.

    However, my parents would now like to gift me the money instead and just write off the loan. As I understand it, this sum could then be liable to inheritance tax if they pass away within 7 years. As my dad is 83 we would not do it in his name, but in my mum's as she is only 67.

    Is this is a fairly straightforward process or am I missing some big bear traps/issues - very keen to do it all properly and legally!

  2. #2
    I would think the mechanics are that your mum will gift you another 30k and you will repay the original joint loan with it rather than write it off.

    As long as the reasons why it was originally a loan not a gift are no longer material.

  3. #3
    Thank you... but what if they don't have another 30,000 to transfer to me to then pay it off again?

  4. #4
    Is your dad's estate anywhere near the IHT threshold?

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