Buy in her name or ours?

cotsvale

Thinking of buying a property for our daughter to live in whilst at Uni because it has beena nightmare so far = Halls were awful, this year house share with 6 others is not as happy as it should be and the house is dirty and cold.

What is the best way to proceed:-
if we buy it in her name could she then take in lodgers (her friends) without being a landlord? Like a private agreement between friends which covers the mortgage?
If we buy it in our name for her to live in and then she takes in lodgers (her friends) to cover the mortgage
or
Buy in our name and get a tenancy agreement for all of them including her?

What is legal/ what is the most tax efficient??
Any help really appreciated.

poppysarah

Speak to accountant for personal tax advice.
Find one who knows about property ownership/trusts/rental etc

tek-monkey

I'd approach it as a business, and make her a tenant as well as the others. If its hers and she needs lodgers what happens if she gets none? Who pays it all? I'd let her treat it as a normal rental, although surely if she can find lodgers she likes she can rent a place with them anyway?

Fire_Fox

If you purchase a house in our daughter's name then you would have to gift her the deposit, she would need to be named on the mortgage (would she get one?) and you may well have to be guarantor. Also any taxable income needs to be declared to the student loans company.

silvercar

I remember reading about this.

Ideally you need to do it in trust. Something to with avoiding you having a CGT liability on sale and any income profit being outside your own personal tax situation.

If it is owned in trust it avoids effecting the income of the student (though I doubt the profit would be enough to have an effect on a students tax bill.

Fire_Fox

silvercar wrote: »

I remember reading about this.

Ideally you need to do it in trust. Something to with avoiding you having a CGT liability on sale and any income profit being outside your own personal tax situation.

If it is owned in trust it avoids effecting the income of the student (though I doubt the profit would be enough to have an effect on a students tax bill.

I could be getting the wrong end of the stick, but ... I understood that students have to declare to student finance any unearned taxable income not unearned taxed income IYSWIM. So you have to declare interest from savings, even tho that isn't necessarily taxed it is still taxable.

silvercar

Fire_Fox wrote: »

I could be getting the wrong end of the stick, but ... I understood that students have to declare to student finance any unearned taxable income not unearned taxed income IYSWIM. So you have to declare interest from savings, even tho that isn't necessarily taxed it is still taxable.

Not a clue, you may well be right.

Though I would guess that (a) there is an amount that students are allowed to earn before it effects their loan, as most students seem to get part time jobs and no-one on here has said they need to calculate the loss on their loan and (b) If the parents earn a reasonable salary (and I'm guessing that if they can buy you a property they probably do) you would only get the non-means tested loan amount, so the amount of earnings is irrelevent.

CLAPTON

a. if it's in her name and she lives there then when its sold there is no CGT; if it's in your name then any profit will be liable to CGT.

b. unless she gets means tested student benefits (i.e. maintenance grant or income related loan ) then the rental income will not affect her student loan

c. in any event the actual profit from renting will be modest once you have deducted costs (like mortgage interest etc )

d. if her rental income falls within the rent a room scehme (check the details) then there is no need to declare any rent anyway.

e. it used to be easy to get a mortgage for this purpose but I have no idea what the current situation is

f. if it's in her name then you will have to be a guarantor

h. if its only for one year then consider if its really worth the hassle and the buying/selling costs... just sub her for a better rental.

silvercar

Do students really want to be landlords? and are they capable?