Buying a house on trust for my Children

[trickypaultree]

I am looking to buy a property to rent out, And I am also looking to set up a Help to Buy government scheme for each of my 2 daughters. How can I buy a house so the rental income from the property can go straight into the 2 help to buy schemes without having to pay tax on it. I want the house to be registered in my name but is there a type of trust I can set up that will cater for this??

[AGoodman]

If you established a bare trust for your daughters, the property would be in your name (as trustee) but the property and therefore the income would belong to them. This would include for tax. You could receive and pay the proceeds into an ISA on their behalf, albeit you would need their agreement - not least because they would open the account. They may also need to complete tax returns as they are treated as receiving the rent for tax purposes.

If the daughters are under 18, you will still be liable for income tax on the rent until they reach 18. While they are under 18, there is not really anything you can do to avoid this.

[AGoodman]

Bear in mind the SDLT disadvantages. They will lose their first time buyer relief and have to pay the additional 3% if they buy their own property.

[AdamS93]

I agree with AGoodman (as ever).

In a few years time, your daughters may not be very happy as they won't get all the benefits first time buyers currently get.

Whether or not BTL is a viable investment anymore (especially with a labour government and rent caps potentially on the horizon and interest rates only going one way) is another question you need to consider.

[trickypaultree]

Thanks for the advice