ChatterBank3 mins ago
Helping kids get on property ladder?
7 Answers
My OH and I downsized in 2010 so have a chunk of money which is currently earning zilch in the bank.
We are thinking about property and are trying to work out how we could get our son on the property ladder but also make money on our investment.
Has anyone any ideas?
NB: I am a non tax payer.
Thanks a lot :-)
We are thinking about property and are trying to work out how we could get our son on the property ladder but also make money on our investment.
Has anyone any ideas?
NB: I am a non tax payer.
Thanks a lot :-)
Answers
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Do you have enough to buy a propery outright ? if so you could buy this and your son could live there, paying you rent. Don't forget to add up solicitors costs, stamp duty etc before you buy. You could Will this property to him on your deaths. Otherwise you could put a mortgage down on a flat and again, he could give you rent and this could possibly pay off the mortgage. I don;t know how this would affect your tax though. I don't think you could actually buy a flat outright and give it to him, there would be some tax implications there, you are only allowed to give him a certain amount tax free per year. I am sure other ABers are more helpful as far as this is concerned. But I would always put money in property rather than the bank, if you can. Doesn't matter how small the property is.
Of course they could buy a property and give it to him. You can give whatever you like to whoever you like whenever you like!
Presumably what you are thinking about is Inheritance Tax and yes, if the donor died within seven years an element of the gift may fall to be taxed within the estate. Even then though it certainly doesn't prevent the gift and the tax would be paid by the estate, not the son, though presumably it would affect his inheritance. It would affect his inheritance anyway though on death so keeping it for years instead doesn't change anything.
All of which is irrelvant as it has no "investment" return. To make money on the transaction you'd need to buy him a house and charge a rent that was more than the money you could have made investing it in a bond. It doesn't get him on the ladder at all though as you'd own the house.
Presumably what you are thinking about is Inheritance Tax and yes, if the donor died within seven years an element of the gift may fall to be taxed within the estate. Even then though it certainly doesn't prevent the gift and the tax would be paid by the estate, not the son, though presumably it would affect his inheritance. It would affect his inheritance anyway though on death so keeping it for years instead doesn't change anything.
All of which is irrelvant as it has no "investment" return. To make money on the transaction you'd need to buy him a house and charge a rent that was more than the money you could have made investing it in a bond. It doesn't get him on the ladder at all though as you'd own the house.
we loaned both our sons the money for the hefty deposits they both needed to buy properties. we sat down with them and worked out how they would repay these loans and how much interest they would pay us given that we had the money invested elsewhere and had a return on it.
that was a few years ago and it's worked very well. just recently they've both been in a position to repay lump sums off these loans which we've now invested. they both still owe us a small amount which they repay by a set amount each month.
it's worked out really well for all of us...it got them on the property ladder and we've still had a (reduced) return on our investment. had we been in a position to, we would have liked to write off the loans as gifts but given the nature of the financial world over the last few years we were unfortunately unable to do that.
that was a few years ago and it's worked very well. just recently they've both been in a position to repay lump sums off these loans which we've now invested. they both still owe us a small amount which they repay by a set amount each month.
it's worked out really well for all of us...it got them on the property ladder and we've still had a (reduced) return on our investment. had we been in a position to, we would have liked to write off the loans as gifts but given the nature of the financial world over the last few years we were unfortunately unable to do that.
Hi Annna it's pretty straightforward actually, you literally draw it up like any other legal agreement to suit what you have both agreed etc. I think you can actually even do it yourself, but in my case my solicitor did it and it cost only a few hundred pounds. Theyre quite common in the US, slightly less so here but still not that unusual, I'm sure of you google for them you'll find something relevant:)
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