Family help with the deposit: gift or loan?

Your family will help with the home deposit. It sounds simple: they transfer the money and the buyer pays the reservation or deposit. But one question must be answered before the money leaves their account: is it a gift or a loan?

That choice changes the paperwork, bank assessment, possible Stamp Duty, repayment expectations and even the conversation about ownership. Do not leave the answer until after the CPCV.

First: gift or loan?

A gift permanently increases the buyer's assets. A loan creates a repayment obligation. Calling the money “family help” does not settle that difference. The parties' real behaviour should match the document.

Do not use a “gift” letter if there is a side agreement to repay the money. And do not use an open-ended loan with no receipts or plan because “it is only family”. Both create questions for the bank, the Tax Authority and the family if relationships change.

A family exemption does not mean “no formalities”

The Portuguese Tax Authority distinguishes non-taxable amounts, exemptions and the duty to report free transfers. Spouses or de facto partners, ascendants and descendants receive more favourable treatment under the 10% Stamp Duty item. Do not confuse that with permission to receive any amount without checking the reporting requirement.

A home deposit is usually large enough to justify checking with an accountant, lawyer or the Tax Authority before the transfer. Confirm:

A loan is analysed differently. The General Stamp Duty Table taxes the use of credit according to its term. A family loan may require a contract, assessment and tax payment even if it is interest-free. Define the real term first and ask a professional to confirm who reports, how much and when.

Prepare the source of funds before the bank asks

The bank assesses income, expenses and liabilities before final mortgage approval. It may also request information about the origin and destination of the funds. The estate agent and completion professional have similar identification and control duties.

Do not make several unexplained transfers in the week before completion. Build a small file and give it to the mortgage manager early.

For a loan, tell the bank the instalment, term and balance. Hiding family debt to improve affordability can delay or compromise the application when account movements or further questions reveal it.

When buying as a couple, align money and ownership

Imagine one buyer's parents provide the whole deposit, but the couple buys in equal shares and both sign the mortgage. The gift, home ownership, mortgage debt and any private adjustment between the couple are four different questions.

Before the CPCV, tell the lawyer or solicitor:

• who receives the gift or owes the family loan;
• who will buy and in which proportions;
• who signs and pays the mortgage;
• whether repayment is expected on separation or sale;
• how the matrimonial property regime may affect the result.

Do not assume the parents' transfer automatically creates a share in the home, or that a private message changes the title. If contributions and shares differ, document the solution before signing.

Do not rely on family money that is not ready

The CPCV sets the deposit, completion deadline and default consequences. If the purchase depends on family help, confirm before paying the deposit:

If any light is red, reduce the deposit, delay signing or negotiate an appropriate condition. A finance clause may help, but it does not replace the equity or fix a poorly prepared gift or loan.

Next step

Before receiving the money, send the bank and your legal professional one page stating: who pays, who receives, amount, date, gift or loan, origin, purpose and available evidence. If you cannot complete one line, you are not ready to use that support for the CPCV.