Buying Property for the kids

[Property WA]

Hi all,

Hypothetical - Mum & Dad have three kids (16, 18 & 21 - all studying). They want to give them a foot up by buying an IP for each (one this year, one next, one the year after).

Parents would buy the property now, rent it out and let the applicable child move in or continue to rent it out (the child could rent elsewhere if desired and have it as their first IP) when they are able to comfortably service and take over the loans.

If there's a post where this has been discussed could someone post the link (i've searched without any luck)? If not...which way would you do it?


Thanks again everyone

 

[alexlee]

Get the kids to save the deposit first.

 

[Property WA]

I agree Alexlee,

but in this case the parents, for personal reasons, would prefer to fund the whole thing & let the kids take over the loan repayments when they are read.

 

[yo yo ma]

I don't know the answer but remember to consider asset protection... With the divorce rate at nearly 50%, you wouldn't want to your kids to lose half of the equity in the properties if they split with a partner. Even if they are not married but living in a defacto relationship for a few years, the ex-partner may still be able to claim. Consider establishing a trust to buy the property with, to protect the kids from losing half the assets. Seek independant financial advice. Good luck with it
Steve

 

[Property WA]

Thanks yo-yo ma, always appreciate reading your posts.

Not actually for me but reasearching for someone else. I thought about Trusts for that very reason and this is definately a consideration given their situation.

Anyone used a Trust for this? If so..details plz

 

[Jindaro]

Anyone used a Trust for this? If so..details plz

The trust I use has the opportunity to change trustees. For eg. the parents could be trustees at the moment and in the future, when the kids take over the property, the trustees could be changed to them. From what I know, no stamp duty is payable this way. But if the parents bought it in their name then 'gave' it to the kids, it would have to be sold to them, incurring stamp duty and possible CGT. Also, this trust has asset protection built into it.

 

[Property WA]

The trust I use has the opportunity to change trustees. For eg. the parents could be trustees at the moment and in the future, when the kids take over the property, the trustees could be changed to them. From what I know, no stamp duty is payable this way. But if the parents bought it in their name then 'gave' it to the kids, it would have to be sold to them, incurring stamp duty and possible CGT. Also, this trust has asset protection built into it.

Thanks Jindaroo,

What type of trust are your currently using (if you don't mind me asking). That sounds like the strategy I had in mind to suggest, especially in light of the CGT & STD exemptions.

 

[Qlds007]

We purchased a 6 x 2 bedroom brick block of units here in Brissie last and renovated, strata titled them.

Sold 2 of the units off and retained the other 4 in Trust with a view to having 1 for each of my 3 children and the other for ourself.

When they get to 21 they can decide what they want to do with the unit, live in it, rent it sell or upto them.

At least gives them a start in life but I retain control.

 

[saskatoon]

Hi, did you see this thread?: http://www.somersoft.com/forums/showthread.php?t=28036&page=3

 

[BoatBoy]

Gee can some of you guys be my Mommy and Daddy, I'm a good little fella, really.

Dave

 

[Property WA]

Hi all,

Thanks again for all the posts. Saskatoon I hadn't seen that post but am reading with interest now..thanks!


P.s. Go the Eagles! (sorry - had to throw that in)