Can we buy a property in our son's name?

H

Harriet

Hello,

Is it possible for my husband and I to buy a property in our son's name.

He has no job (uni student) and no deposit; but we have the deposit and ability to pay the mortgage.

If there is a way to do this, could he further take advantage of the first home buyer's grant (if it's a new build)?

Thanks,

H.
 
You will need to be on the title for servicing/borrowing capacity purposes.

So you will need to have all 2 (or 3) people on the title.

Yes he would be still eligible for the FHOG but your share in the property cannot exceed 5%.

From a finance perspective you will need to choose the right lender (e.g. a lender like Westpac will not be suitable as they will require a minimum 20% share).
 
Think about this.

Will it be him buying a property with your money?

What are some of the legal issues?
He would be owner. Would it be his property or him acting as trustee for you?
What if he
1. dies
2. bankrupt
3. family law
4. incapacity
5. sells it
6. mortgages it and uses the money to buy clothes
7. uses it as security for options trading

Whatever you do make sure it is properly documented. The money you supply - gift or loan, any security if it is a loan etc
 
Short answer is no. He cannot own a property he cannot afford. However if you are purchasing it with you and your partner on it then we can use the income. Issue is possibly 3 of you will need to be on title
 
The safest way is to lend them the deposit = no need for a guarantee and then lodge a caveat. But im not sure this will work if there is no income.
  1. Lend the money interest free OR
  2. Lend the money at a certain interest rate. Create a commerical loan agreement outlling the childs repayments with the spouse as a party to the agreement (witnessed by JP or lawyer)
Child can get the bank to revalue the property and increase their mortgage limit to repay the parents. Parents will need to declare loan income to tax department. But there may be a lack of equity growth for the child.

Do not do this:
If you gift the deposit then if they are in a defacto relationship then the other half will have claim on the equity. If you co-own then there is CGT and stamp duty liability
 
Do you have enough equity in your own property to borrow the entire amount against that. You could then "loan" him the cash and he could pay outright for the house. You would obviously have to have some sort of loan agreement. It should be straightforward enough for him to refinance the loan at a later time when his income is more favourable.

(please don't hit me, Terry)
 
My question to you is why?

Sounds like its just to take advantage of the FHBG/discounts?

Does the risks outway the benefit?

Also like the others have suggested probably using a tax structure to achieve your goal is most likely.

Would be a good idea to see professional legal advice on the matter.
 
Jake D said:
Do you have enough equity in your own property to borrow the entire amount against that. You could then "loan" him the cash and he could pay outright for the house. You would obviously have to have some sort of loan agreement. It should be straightforward enough for him to refinance the loan at a later time when his income is more favourable.

(please don't hit me, Terry)
Click to expand...

This would probably be the best suggestion so far - as long as properly documented and transacted. Son can later refinance when he gets a job.
 
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