BTL for my Baby

phillsmit3

Hi

Does anyone know of a good, sensible way to get a BTL property for my newly born baby girl?

The ideal situation would to be able to put 10k deposit down for the house and have it in my babies name with me as a guarantor for the Mortgage. Then there would be no income Tax or other tax issues compared to if I bought it in my name and transferred it over when my daughter is 18.

I realise nothing is this simple but does any one know of other really good ways to achieve this. E.G. Trusts etc

macman

A couple of minor problems: until she's 18 she can't have a mortgage, or buy a property in her name, since minors cannot be bound by contracts.
And income tax does not start at 18, it is levied when your income exceeds your personal allowance-nothing to do with age. So any rental income would still be taxed.
Back to the drawing board I think.

phillsmit3

I realise this. Anyway of doing it with trusts etc? Also not too worried about income tax but if I could avoid cgt when she turns 18 that would be a bonus. If it could be in her name somehow the yearly profit would not hit the threshold.

atush

Far better to open a JISA for her, in equities (I had investment trusts for my 3).

BTL, is a no go due to her age, and is tax inefficient as you pay tax on the income and the gain.

redmalc

BTL could be an issue after next Thursday if RED ED gets in,he will be setting the rental you can charge,a dictator may I say

uknick

phillsmit3 wrote: »

I realise this. Anyway of doing it with trusts etc? Also not too worried about income tax but if I could avoid cgt when she turns 18 that would be a bonus. If it could be in her name somehow the yearly profit would not hit the threshold.

You might avoid CGT when she turns 18, but she/the trust will have a CGT liability for the first 18 years of owning the property as she doesn't live there.

Having said that, who knows what the CGT rules will be in 18 years time.

themanfromamarillo

Yes, a dictator like Merkel, Churchill and Bloomberg, all of whom have run governments which had/have rent control.

Milliband's proposals are simply to say that over the course of a 3 year tennancy rent increases will be capped at inflation. There are no proposals to restrict the initial rent charged. This is the system in many US cities and in many places on the continent. Germany for instance has different rent controls but still 90% of people in Berlin live in private rental accomodation.

On the original question, remember there is a significant risk to BTL. You might get a bad tennant, house prices may go down by 20%. Also housing is an illiquid asset, what if you need the money for your child at short notice? With shares you can sell with a click of a button, ditto with a withdrawl from savings. Housing needs several months to get access to your assets.

Drp8713

Not sure why you would want to lumber a baby with a big mortgage debt which would eat into returns. The returns are not tax efficient as would be liable for income tax and CGT.

Plus the hassle factor of being a landlord, the lack of diversification, the illiquidity of the thing.

A JISA has none of those drawbacks and equities will likely out perform property, although you can still get property exposure of you want to.

xylophone

Trusts have to be registered with HMRC, their tax treatment can be complex, more so where a parent has provided the capital.

See http://www.step.org/parental-settlements

http://www.professionaladviser.com/retirement-planner/feature/2300647/how-not-to-fall-foul-of-parental-settlement-rules

MARTYM8`

I thought this thread was a joke when I read it?

Buying a buy to let for your baby?:eek: I suppose it just shows how our obsession with property as the sole way to invest for the future has got way out of control.

Perhaps something more liquid might be useful e.g. junior cash isa or investments?

phillsmit3

With a low deposit and getting the property at the correct price I've been able to double my initial investment amount in 5 years. I'm very confident I can out perform any isa with the correct property and using leverage. You can instantly make thousands just by buying the correct property at the right price. Yes it does take much more effort but nothing comes for free

I recon with an initial 10k investment and a little input here and there at the age of 18 the equity in the btl would be at least 60k