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Where Taxpayers and Advisers Meet

Tax Liability

limoges
Posts: 18
Joined: Sun Feb 13, 2011 12:51 am

Tax Liability

Postby limoges » Mon Apr 08, 2019 12:40 pm

We have four grand children presently in education. Two are just over 18 and about to go to university. The other two are aged 16 and are at a fee paying school

As grandparents we would like to help cover some of their university fees and school fees and have contemplated the following course of action

Provide the funds for the purchase of a new property in the names of the 4 grandchildren. Presumably as two are over 18 then the the property can be registered in all four names ( including the two 16 year olds.)

The four grandchildren would then rent out the property and the proceeds would go towards their school and university fees. Tax on the rental income would be more than covered by their four tax allowances.

In future years should any of them wish to buy a property in their own right than he/she could sell their quarter share to the others at the then market price, and thereby qualify for the low rate stamp duty of a buyer who did not already own a property

Would this scheme work. It Is appreciated that as grandparents we will have created a PET, but we are young enough to reasonably expect to survive for at least 7 years.

SDLT Geek
Posts: 159
Joined: Sun Apr 30, 2017 5:45 pm

Re: Tax Liability

Postby SDLT Geek » Mon Apr 08, 2019 9:25 pm

The property can only be registered in the name of adults, but that does not stop minors having a beneficial interest in a property.

One shame with your plan is that it would stop all four grandchildren from being first time buyers for the purposes of the SDLT relief on a later purchase.

Some of the tax issues are covered here: https://www.blakemorgan.co.uk/news-events/blog/bank-mum-and-dad-university-purchase/

AGoodman
Posts: 767
Joined: Fri May 16, 2014 3:47 pm

Re: Tax Liability

Postby AGoodman » Mon Apr 15, 2019 10:58 am

" In future years should any of them wish to buy a property in their own right than he/she could sell their quarter share to the others at the then market price, and thereby qualify for the low rate stamp duty of a buyer who did not already own a property "

what will they buy it with?

It does sound like a recipe for complexity. Will those at school really be paying their own school fees? and what about the situation when the 2nd and 3rd want to sell for SDLT reasons or simply to realise other funds - they may want to pay off their other student debt which isn't covered by the rent.


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