Buying younger children an investment?

Buying younger children an investment?

9:51 AM, 7th September 2021, About a month ago 4

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Hi, I want to purchase a flat for cash, for my two boys (aged 15 & 13yrs). The income will take care of any maintenance and service charges as well, and the balance contributing to their ISA’s. It also gives them a place to live sometime in the future should they want to live in the city of Manchester.

1. How best to do this?
2. In trust?
3. Or can I purchase with a percentage of say 2% and give them 48% each and if so do I pay tax on the 2% of the net income generated?

I would welcome any comments and advice to ensure the most tax-efficient way of achieving this.

Regards

Peter



Comments

by Alex Norian

10:47 AM, 7th September 2021, About a month ago

Hi Peter,

I would recommend formation of a SmartCo structure. Then loan the money to the company to purchase the property. This would mean your estate 'value' in the company would not be locked in the shares and could be repaid to you over time by virtue of your director's loan account or gifted to the kids.

It sounds as if you do not want / need the income and this would enable the ring-fencing of the profits within the structure to reinvest into growing the portfolio, to maximise the legacy for your boys.

It would also ensure that the capital appreciation not only occurs outside of your estate, but also outside of your children's estate.

You would then gift them freezer shares, which would not have increased in value, when they turned 18.

If you've not yet read The Ultimate Guide to Landlord Tax Planning, I would advise you take a look.

https://www.property118.com/the-ultimate-guide-to-landlord-tax-planning/

by Dylan Morris

11:45 AM, 7th September 2021, About a month ago

Also ensure there’s no restriction on letting the flat out. Some leases require the freeholder’s express permission and some leases even prohibit it all together. Others are silent on the matter (which means there’s no restriction and you can rent it out). Make sure your conveyancer is aware, especially as you’re buying the flat for cash and there’s no BTL lender involved.

by Ian Narbeth

16:56 PM, 7th September 2021, About a month ago

Peter
I recommend you speak to your accountant who can take account of all relevant circumstances.

by Glyn Jenkins

14:03 PM, 11th September 2021, About a month ago

Buying them a Leasehold flat with ground rent, and uncapped service charges, and, managed by an unregulated cartel of bandits.?
Your kids will love you!


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