Buying a house for your kids

[enaid]

Best way to buy a house for your kids, no IHT and any other tax loopholes includd.

[EXC]

Re: Buying a house for your kids

If you're reasonably confident that you're not going to die in the next 7 years then give them the money as a gift and there is no tax liability for anyone.

[enaid]

Re: Buying a house for your kids

Sorry wrong, a gift is counted as assets.

[enaid]

Re: Buying a house for your kids

So do I buy a buy to let mortgage and rent him the property ? or do I mortgage the property and give it in the future? I just need an answer

[Kati]

Re: Buying a house for your kids

[MENTION=85500]Peridot[/MENTION] might have some ideas xx

[EXC]

Re: Buying a house for your kids

Sorry wrong, a gift is counted as assets.

Our family did it with 3 children and we took a lot of legal advice on it. I'm not sure if there's a threshold but we did it with 3 x £1m which mainly went on properties.

If you wish to give your child a more sizeable sum over the annual allowance, tax implications can become complicated. If you die within seven years of making that gift, there could potentially be up to a 40% inheritance tax liability payable by your child.

However, as long as you live seven years after making the gift – known as a ‘potentially exempt transfer' – then there is no tax to pay.

https://www.saga.co.uk/magazine/mone...ey-to-children

[Peridot]

Re: Buying a house for your kids

Hi Enaid,
It's a difficult one as it isn't just the inheritance tax issue in the future. You've worked out the 'gift' issue if anything happened in the next 7 years, then the value (or a tapered amount of the value) could be included in the estate valuations for IHT calculations. Don't forget your annual nil rate band allowance and the possible spousal exemptions available (potentially £650,000). Depending on the value of the estate it may not be an issue?
However, if you were to purchase a property in your name, whichever way you did this buy to let or just mortgage another property, then it is your asset (or half the value of it depending if it is in joint names). Any rental income would have to be declared if a buy to let and in the event a care home scenario were to happen than the value would be included in any care fee calculation. If you owned 2 properties then it is highly unlikely you would be eligible for any help with care fees. You would be expected to fund any fees yourselves, even if this meant selling one of the properties.
It is a bit of a minefield I'm afraid and one I'd really get some proper financial and legal advice on. Sorry I can't just give a straight answer on this one.