Buying flat for adult son

Suziekettles

I’ve been left money following the death of my father. We are planning to use most of this to buy a flat for our youngest son. He is 28 and lives with us, he has savings and will contribute approximately 20% to the (cash) purchase, he can then rent it from us. He is vulnerable, single and works part time in retail, his income will allow for him to pay for overheads (ground rent, service charge, community insurance, council tax etc) budget with help for living expenses plus a peppercorn rent. We are trying to plan to ensure he is secure when we are no longer around.
I’d given no consideration to the tax situation, I know little, husband is a bit better informed but we need to take advice. If we buy in his name will he then be penalised from a tax point of view? Are we better to buy in our name and leave it to him in our wills?
We want to leave everything as simple and uncomplicated for him to manage in the future.
Any advice appreciated.
Many thanks.

davidmcn

Buying it in your name: you'd be paying additional rate of stamp duty for a second property, potentially liable for Capital Gains Tax when you dispose of the property, or Inheritance Tax if it's still yours when you die. Plus potentially Income Tax on rent (if it's high enough).

Buying it in his name: gets stamp duty first time buyer relief (assuming he is a FTB), no CGT while it's his main residence, no hassle dealing with inheritance from your estates.

So better to give him the money to buy in his own name. If you want to secure any repayments from him you could set it up as a private mortgage with a security over the flat.

This assumes that his "vulnerability" doesn't make it a bad idea for him currently to be a property owner.