Inheritance for 12 year old and declaration of trust!Make Text Bigger
My 12 year old daughter has inherited a substantial amount of money from a relative, we want to invest this for her in property. We have a few rental properties already and would like her to have an interest in these by giving us some of her money. We will also be purchasing additional property and using a declaration of trust for her beneficial interest until she is old enough to make sensible decisions (another topic I sure!!).
Whilst I understand declaration of trust/ HMRC Form 17, etc thanks to the vast amount of valuable information posted on this web site, I would be grateful for some clarification on a worked example.
One of the properties we own is as follows:
Purchase Price with renovations, etc £90,000
Current Value £150,000
So mine and my wife’s equity is obviously £50,000 so if we were to have £50,000 of my daughters money and give her that share, would she own 33.33% or 100% as the balance is mortgaged. I am probably being a little dim but can’t quite get my head round it! I think it is the 33.33% but if that is the case our 66.66% if basically all financed. What happens with the rent, I assume if she owns 1/3 she gets 1/3 of the rent, less 1/3 of costs? But what happens with the mortgage interest. Now getting more confused???
I am assuming any rent paid to her would be legitimately hers as she inherited it directly? I am also assuming she could use her personal tax allowance and that we would have to complete a self assessment each year for her?
Any advice or ideas would be gratefully received.
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