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Where Taxpayers and Advisers Meet

Help: Tenants-in-Common vs Trust Deed for BTL purchase with Daughter

NickPrice
Posts:32
Joined:Fri Sep 11, 2015 12:39 am
Help: Tenants-in-Common vs Trust Deed for BTL purchase with Daughter

Postby NickPrice » Thu Feb 25, 2021 4:17 pm

Hi,

I have had an offer accepted for a BTL property that I wanted to co-buy with my 20-year old student daughter. The mortgage broker says it is difficult to get her accepted, as she is not working. The alternative is therefore to buy in my sole name and get a trust deed that gives her the majority beneficial interest. I wonder how robust such an arrangement is? The idea is to sell again in 5 years time. I wonder whether HMRC can object to the rental income and CGT being split when she is not on the title but her being the beneficiary owner is stipulated only in a trust deed?

I am trying also to avoid going through a ltd company route as it is terrain that in unfamiliar to me and I like to keep things simple. Also for her being in a ltd company is not advantageous.

Please do share your knowledge and advice. Thanks.

bd6759
Posts:3578
Joined:Sat Feb 01, 2014 3:26 pm

Re: Help: Tenants-in-Common vs Trust Deed for BTL purchase with Daughter

Postby bd6759 » Thu Feb 25, 2021 5:24 pm

Trust deed is binding, but be aware:
1. lender might not be happy about you giving away part of the property -it is security for your debt
2. mortgage interest can only be used against your share of the profits
3. you might be saddling your daughter with an additional 3% SDLT when she buys her home (as well as denying her any first time buyer incentives).

NickPrice
Posts:32
Joined:Fri Sep 11, 2015 12:39 am

Re: Help: Tenants-in-Common vs Trust Deed for BTL purchase with Daughter

Postby NickPrice » Thu Feb 25, 2021 10:19 pm

Thank you. This is very clear. The point about only being able to list mortgage interest as expensive if one is on the mortgage is pivotal. Thanks again.

NickPrice
Posts:32
Joined:Fri Sep 11, 2015 12:39 am

Re: Help: Tenants-in-Common vs Trust Deed for BTL purchase with Daughter

Postby NickPrice » Thu Feb 25, 2021 10:21 pm

I meant expense (not expensive), sorry

SDLT Geek
Posts:230
Joined:Sun Apr 30, 2017 5:45 pm

Re: Help: Tenants-in-Common vs Trust Deed for BTL purchase with Daughter

Postby SDLT Geek » Sun Feb 28, 2021 8:35 pm

You are budgeting for the extra 3% SDLT on the purchase? I expect you have another property interest, so as a result of you having a share in the property the extra 3% SDLT is due.


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