Children and tax and property

building

can you put a house in the name of a child (she is under one). after we plan to possibly rent this out and should this then still be left in her name? what are the issues we should be aware

telly-addict

I'm not sure that a minor can hold property as she is under 18 and unable to give a valid receipt. They don't have capacity to be a party to a contract.

Assuming you bought the property and then gifted it to her, you would have made a gift that has Inheritance Tax (potentially exempt transfer) and capital gains tax (gift to a connected person, deemed sale proceeds of the market value) consequences.

If she were able to own the property, which I doubt, she would be assessable on the rent herself. The Inland Revenue could say the whole set up was to avoid tax and catch you under the settlements legislation.

I am answering this from a tax point of view, a legal expert will be able to clarify the whole ownership issue. There is always the possibility of putting it into trust for your daughter but there has been recent legislation which doesn't make it worthwhile for tax purposes.

Cook_County

I assume telly-addict is focusing on English law, although you do not state in which legal jurisdiction the property is to be located.

From a UK tax perspective if the property was transferred from the parent(s) any income (but not capital gains) would be deemed to be the parents.

There are also SDRT issues to sort out.

Where is the child domiciled? This may influence the desicion too.

building

thanks both to yoru comments which are appreciated. we have a house just bought in france and own property in UK. both in my name (mum). may eventually think of living in france a good chunk of the year. child could be domiciled either country as she is mixed french/english anyway. not really worrried about the rental money but more a question of capital gains.

building

I remember reading recently that the male presenter who does location location had done just that purchase a property in the name of the child

Debt_Free_Chick

I think that given the complexity of the legal & tax issues, plus the fact that the property is overseas, plus the fact that domicility may be an issue ...... that you really do need specialist advice. Money Savers are great folk, but you are really not going to get the answer & advice you need from this or any other online forum.

Suggest half an hour's consultation with a tax specialist or lawyer specialising in tax.

Bossyboots

I echo DFC here, particularly as French inheritance laws are different to ours.

Cook_County

From a UK tax perspective the child is domiciled in the place father is domiciled if the parents are married.

From a French perspective Napoleonic inheritance laws apply so you do need a lawyer conversant in UK and France. Nothing else would suitably carry out your duty to your family...