Buying a Flat for Student Daughter To Live In

JamboWeb65

_Penny_Dreadful said:

jonnydeppiwish! said:

Is there any reason why your daughter doesn’t get a student loan to cover it rather than you pay for it? They are choosing to do a second degree

Student loans are generally only for your first degree. You don’t get two bites of the cherry. 

Thanks both re this.  The type of degree she is doing means she will receive some funding which should cover living expenses.  The cost of the degree is also funded so its really only accommodation and travel - sorry don't want to get too specific but thanks again.  

JamboWeb65

km1500 said:

Gift your daughter the money

She buys the flat in her name and lives there

There is no additional stamp duty to pay and no CGT on any increase in value

Thanks KM re this.  Thanks also to everyone who has replied - v much appreciate your help

Presumably if the money was gifted, my daughter would then later on be able to still take advantage of any first time buyer mortgage deals?

I've no idea why but this seems an obvious way to do this.  For whatever reason, I think there must be a catch not thought of.  

user1977

JamboWeb65 said:

km1500 said:

Gift your daughter the money

She buys the flat in her name and lives there

There is no additional stamp duty to pay and no CGT on any increase in value

Presumably if the money was gifted, my daughter would then later on be able to still take advantage of any first time buyer mortgage deals?

It depends on the lender's definition of "first time buyer". I'm not sure it's that great an advantage anyway. More importantly, she'd no longer be a FTB for LBTT purposes.

km1500

First time buyer has different meanings to different institutions so I would not worry about it at this stage.

Your daughter would of course have to sell the flat if she later moved to avoid paying the extra 6% on her new purchase

JamboWeb65

km1500 said:

First time buyer has different meanings to different institutions so I would not worry about it at this stage.

Your daughter would of course have to sell the flat if she later moved to avoid paying the extra 6% on her new purchase

Hi, so at a point in time, say 5 years, she sells the flat and gives us the money back.

Presumably though she will forfeit the LBTT first time buyers advantages if we went down this route?

Thanks again 

km1500

Well she would get the first time advantage when she bought the flat using your gifted money

user1977

JamboWeb65 said:

km1500 said:

First time buyer has different meanings to different institutions so I would not worry about it at this stage.

Your daughter would of course have to sell the flat if she later moved to avoid paying the extra 6% on her new purchase

Presumably though she will forfeit the LBTT first time buyers advantages if we went down this route?

She uses up the FTB relief as soon as she buys a property - it makes no difference where the money came from.

JamboWeb65

km1500 said:

Well she would get the first time advantage when she bought the flat using your gifted money

Thanks and v true.

jennifernil

If you expect her to repay the money at the end of her time at Uni, I would make it a loan, and place a charge on the property, it is not expensive to get a solicitor to do that.  You just never know what could happen in the intervening years that might mean your money is lost to you.

Should she decide to stay on in Dundee after her degree, once she is earning she can start paying you an agreed amount of interest, which for you would be taxable if you are a taxpayer or she could apply for a mortgage elsewhere.

Our daughter pays me what I would otherwise be earning if the money was in a good savings account, I am not a taxpayer as I only have a very small pension.

Sarah1Mitty2

lika_86 said:

Is this a small flat just for her? You mention it's a second degree but I wouldn't rule out the possibility that she will find friends she wished she could move in with after first year.

Given the second home SDLT, costs to buy, service charge and ground rent, costs of kitting the place out and maintaining it and costs to sell, at that point it's probably cheaper for her to rent.

Possibly, and if the market drops any savings or cash you have put in also disappear "into the ether", and you will still have to pay interest on any outstanding mortgage.