Stamp duty rules on buying property to be held in trust.

fforsythuk

Hope someone can help please.

My mum gifted some money for mine and my partner's children. She said to do whatever is best with it (in terms of investment).

My partner and I thought about using the money as a 25% deposit towards a property (the rest would be mortgaged).

My partner and I already own our family home plus one additional BTL property in my partners name only.

First question: can we use the money to buy a property and put it in some sort of trust for our kids. Can we do this if the mortgage is in our names?

Second question: if we can put it in some sort of trust, how would the BTL stamp duty rules play its part in this scenario???

Thank you in advance for any advice.

booksurr

for mortgage purposes - I don't know

if the children are still minors then any income from the rental property will be assessable against your tax not against their tax

for SDLT purposes you would need to establish a bare trust for your children. You would then hold the status of bare trustees and provided they (ie their trust since they are presumably under age and cannot legally hold in their own name yet) do not already own any other property then the trust would not be liable to higher rate SDLT - but it is not the trust who would have the mortgage...

read Chapter 5 https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/509184/GuidanceNote_Final.pdf

fforsythuk

Thanks booksurr

We (the parents) are home owners and so we did suspect that the higher SDLT would be payable.

Thanks for the link, we'll take a look at it anyway.

agrinnall

Have you actually established whether it would be possible to get a mortgage? Given that you will have no interest in the property I'm doubtful if any mainstream mortgage provider would lend to you, and I can't see that the trust would be able to take on any debt. I think you would do well to seek professional advice before going any further with your plan.

AdrianC

You need specialist legal advice from somebody about the trust, both in actually setting it up, but also in whether what you want to do is actually sensible - so the SDLT question is going to add nothing to the cost and work involved.