Buying flat for daughter with mortgage?

xylophone

Are you and your spouse in a position to make your daughter a gift of the deposit on a flat?

This would be a PET for the purposes of IHT.

It would then be up to your daughter and her partner to buy the flat as tenants-in-common with a legal agreement to protect her interest as she would have paid all of the deposit.

pjcox2005

G_M wrote: »

Yes you'd need a BTL mortgage as you'd be landlords, and as pixie says, most BTL mortgages prohibit letting to family - speak to an independant mortgage broker.

2nd property SDLT
Tax on rent
Capital Gains Tax when you sell

And see:

* New landlords: advice, information & links

Are upsides too though, just off top of head.

• Keeps control of an asset and potential gain in value
• Allows daughter to use 25% LISA uplift to save deposit if lower than market rent
• Able to structure low rent to reduce income tax but higher gain at end so it goes into chargeable gains and potentially two allowances.

Summary, basically combining wealth in families ultimately saves money/has benefits (as you're not paying a third party the profit they make on rent and gains) but at the risk of compromising family relationships if it goes wrong (or even when it goes right in some circumstances).


Regulated mortgages does restrict the position though and the recent tax changes make it a bit harder.

csgohan4

never mix family and money unless your made of money and can afford to 'give' them the money without Ever expecting it back.

There could issues of deprivation of assets potentially if your throwing money at your daughter to avoid care home fees in future for example.

Crashy_Time

csgohan4 wrote: »

never mix family and money unless your made of money and can afford to 'give' them the money without Ever expecting it back.

There could issues of deprivation of assets potentially if your throwing money at your daughter to avoid care home fees in future for example.

A BTL is probably one way to lose money if you want to avoid such fees?

Doodlebug5

I'm on the other side of this.

My parents bought me a property and 7 years later it's increased over £60k in value. They have decided to give us that deposit which puts us in the position of being able to afford a very decent house as "first time buyers"

We couldn't of done this without their help.

booksurr

Doodlebug5 wrote: »

I'm on the other side of this.

My parents bought me a property and 7 years later it's increased over £60k in value. They have decided to give us that deposit which puts us in the position of being able to afford a very decent house as "first time buyers"

We couldn't of done this without their help.

don't spend the full 60k then. Your parents have yet to work out their CGT liability and calculate how much cash they will actually be left with out of that 60k increase after they have paid their tax

Crashy_Time

Doodlebug5 wrote: »

I'm on the other side of this.

My parents bought me a property and 7 years later it's increased over £60k in value. They have decided to give us that deposit which puts us in the position of being able to afford a very decent house as "first time buyers"

We couldn't of done this without their help.

Not London then?

hazyjo

Crashy_Time wrote: »

Not London then?

Nah, can't be - would have doubled in 7 years!

juniordoc

This is especially risky if your daughter and her partner have never loved together before. Also if she has never rented she could benefit from the life experience that would give her.
Maybe worth considering this after they have rented for 6-12 months?
Also looks like investment wise it may be worth you gifting her some money for a deposit and then getting her to gift an amount back to you when she sells down the line.

Crashy_Time

juniordoc wrote: »

This is especially risky if your daughter and her partner have never loved together before. Also if she has never rented she could benefit from the life experience that would give her.
Maybe worth considering this after they have rented for 6-12 months?
Also looks like investment wise it may be worth you gifting her some money for a deposit and then getting her to gift an amount back to you when she sells down the line.

Or wait and see what Brexit and interest rate rises bring?