Buying to let with daughter

lees80

theartfullodger wrote: »

Welcome to MSE:

Apparently some people might say ...

Part of being a patriot is not to fiddle your tax. Or your daughter's.

And what a terrible example/lesson you are giving to your daughter.

Thankfully with the mobile number you kindly provided it's easy to find your name & email - keen cyclist explains the id. HMRC will likely already investigating.. Good old Google eh?

But not me, obviously.

Other people of the same name and very similar area, and their previous behaviour towards money certainly rings alarm bells with this post! Of course, could be totally wrong....

randonneur

The daughter is getting a PET , Agents are usually quoted as up to 20% but seems no maximum.
Yes the aim is to not be subject to the second home tax yet do more than just put the money in the low interest savings.

The daughter also benefits from less tax on inheritance due to the PET.

If you can't ask questions without critisism what is the point of the FORUM.

randonneur

Yes you are right, I had read this off Countyside site about the Pre-Nup and I was wondering, so just put the whole idea out there as an Aunt Sally.

theartfullodger

20%? I pay 6% on one since 2006. At our annual lunch (I take her out annually, I pay) I said I'd understand an increase with the banning of tenant fees but she said no!

davidmcn

If you're providing all the money and taking all the rent, who do you think will be treated as being the beneficial owner?

Conversely, is there anything preventing your daughter from sacking you as "agent" on Day 1?

G_M

randonneur wrote: »

This is a request for advice.
I am buying a house to let with cash.No you are not. You are either gifting or loaning some money to your daughter, and she is buying a house to let with cash.
I have a home already so it will be bought by my daughter and a prenuptial agreement if she marries. Well that's down to her, not you.
I will be the agent as I am a licensed letting agent. Assuming you are in England you don't ned to be a licenced letting agent.
First question is there any cap on how much I can charge as agent. For example all the rent. ? Clearly HMRC would not believe this.there is no specified 'cap', but any unbelievable amount would be viewed as tax evasion.
Note I will be paying tax on my income. Your daughter will have to declare the dull rent received on her self assessment tax return. She can, of course,off-set allowable expenses and that means the amount of tax she'll have to pay is impossible to foresee, but passing you some or all of the rent wouldnot remove her obligation to declare it.

Then I plan to be gifting my three children probably with the rent. I assume you understand the Inheritance Tax rules?

My daughter will own her first house , she lives in Germany and is unlikely to be buying a house to live in in UK.
So the second home stamps will not apply. Yes it will. This will be her 2nd residential property. She will have to pay the additiona 3% SDLT

To ensure that the other children do not lose out the will will specify that her share is minus the value of the house she owns. Value at pont she buys it? Or at date of your death?

If I can charge full agent fees to the rent value she will not get an income from it but I will and I will pay tax on that.
She is likely to be investigated for tax evasion. HMRC will never believe that the full rent goes on agents fees.

However if she sends a form declaring the UK income she will benefit from the tax allowance here and pay no tax. She will have to submit an annual self assessmnt tax return
What happens overall when also earning in Germany? Ask on a German forum. No one here is familiar with German property or income law.

The overall aim is to create a pet of the house and have no extra stamp duty. But to have extra spending money for myself. a 'pet'?
Daughter willbe liable for 2nd property SDLT. She already owns a property abroad.


Please can you give me advice on my proposal.

It makes me happy to invest my inheritance wisely and even happier to make it work for my children.

Thanks

Your plan is well-intentioned but ill-thought through.


One or both of you will end up in trouble!

davidmcn

G_M wrote: »

Daughter will be liable for 2nd property SDLT. She already owns a property abroad.

I don't think the OP has told us that.

lees80

randonneur wrote: »

The daughter is getting a PET , Agents are usually quoted as up to 20% but seems no maximum.
Yes the aim is to not be subject to the second home tax yet do more than just put the money in the low interest savings.

The daughter also benefits from less tax on inheritance due to the PET.

If you can't ask questions without critisism what is the point of the FORUM.

I think you're confusing money saving with tax dodging - at least to a certain degree that is what your post implies. They are obviously not the same thing and only one of them is widely encouraged across this particular forum.

AdrianC

randonneur wrote: »

I am buying a house to let with cash.
I have a home already so it will be bought by my daughter

So you are not buying it, you are gifting your daughter the money to buy it.

I will be the agent as I am a licensed letting agent.
First question is there any cap on how much I can charge as agent.

Does the licencing qualification not cover that?

For example all the rent. ?

I suspect that if you try telling the tax man that you gifted your daughter the money to buy the house, and you charge her 100% of the rent for managing it, you might find him raising an eyebrow about how legitimate the deal was, and whether it was all an elaborate ruse to get round SDLT. Which, of course, it is.

Then I plan to be gifting my three children probably with the rent.

So why not just gift them all the money to buy the property in their joint names?

My daughter will own her first house

Assuming her property is +£40k, then she will be paying the +3% SDLT anyway.

So the second home stamps will not apply.

Yes, it will. Property outside the UK counts. Unless you plan to lie to the tax man about it.

00ec25

randonneur wrote: »

The daughter is getting a PET , Agents are usually quoted as up to 20% but seems no maximum.
Yes the aim is to not be subject to the second home tax yet do more than just put the money in the low interest savings.

The daughter also benefits from less tax on inheritance due to the PET.

If you can't ask questions without critisism what is the point of the FORUM.

I suggest you pay for tax advice from a professional because your DIY attempt is swiss cheese

you want her to be the legal owner for IHT purposes to establish a PET but then you want her to evade income tax by declaring zero profit on her beneficial interest because you plan to charge an extortionate "management fee"

HMRC have already seen through that amateur attempt

you state she lives in Germany, but have not confirmed if she owns or rents her accommodation over there.
the first would entail her paying the higher rate SDLT
the latter, standard rate

she needs to read the UK/Germany tax treaty re her German tax position on rental income