House purchase for children

Allandsundry247

My husband and I bought a house as an investment in our young adult children's name for their future. We would like to let it out and claim the income for ourselves to recoup some of the funds we used to renovate it. We know it is listed as additional income for tax purposes and would do that but can we let it out as our names are not on the deeds.

Keep_pedalling

Any income will be your children’s not yours. 

This is also the wrong forum I have asked for it to be moved to the property board.

Allandsundry247

Sorry, I didn't realise there were different forums.

Schwarzwald

Who old are your children that own it?

HampshireH

If the house is in your children's name then it is theirs to let put not yours. 

Therefore any income from that property would also be theirs not yours.

Sadly they will also no longer benefit from the first time buyer status and may also incur extra stamp duty should they decide to buy themselves, due to having a second home.

Also if they aren't living there capital gains tax will come into the equation should they decide to sell too.

Buying a home for them wasn't the best idea if they aren't living it in. Are they likely to want to live together. Quite often a recipe for disaster when one finds a partner the other lives there and has to pay the others rent.

Gets messy

FlorayG

You say they are 'young adults' so presumably over 18. It's their house to decide what to do with so effectively they would be renting it out and gifting you the income if you did this - with whatever tax implications that involves

housebuyer143

Do you kids a favour and change it back. If they don't own a house you have now burdened them with higher rate of stamp duty and made them ineligible for means tested benefits. They will also be stuck with a capital gains tax bill when you sell. 

Either it's theirs or it's not. You can't just keep the rent etc. 

FlorayG

housebuyer143 said:

Do you kids a favour and change it back. 

I don't think it's that simple; the children surely would have to gift the house to the parents, you can't just say "I paid for it so I'm changing the deeds back to my name"

Emmia

FlorayG said:

housebuyer143 said:

Do you kids a favour and change it back. 

I don't think it's that simple; the children surely would have to gift the house to the parents, you can't just say "I paid for it so I'm changing the deeds back to my name"

They've lost their first time buyer status even if they sell or transfer, as they already own a home/have owned a home previously.

OP it's a bit late now, but the money you spent on buying and refurbishing the property would have been better put into non property investments or savings.

RAS

Regardless, the kid's have already lost their first time buyer status, permanently.

And I'm not sure HMRC will wear the intended allocation of rental income. Apart from the issue of eligibility for benefits, check the impact on student loans and grants.

FlorayG

OP you need to ask the children what they want to do with it
Do they live with you? Are they working? Do THEY pay YOU any rent?
I assume, as you've recently finished refurbishing, that you bought it not long ago? Maybe it could be sold at a nice profit and the profit in their bank accounts would offset the FTB loss they will have when they want to buy a house?
Or, they could rent it out and I'm sure there is a legal way for them to reimburse you for the money you spend on refurbishing same as you would pay any contractor for work done
Is it bought outright or mortgaged? If mortgaged they will need the lenders permission to rent it out
Who is paying the second home council tax on it if they aren't living in it?