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TonyTax
TonyTax, Tax Consultant
Category: Tax
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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My 3 girls age 17 have been left money by a relative. They

Customer Question

My 3 girls age 17 have been left money by a relative. They want to buy a buy-to-let house each before they go to uni next year. I have found they are legally unable to buy a house until they are 18 (March) but we have found 3 houses that are ideal and would like to go ahead. I think that my husband and I could buy the houses in trust on their behalf ie put them in our names but use their money and then put them in their names when they reach 18. Can we do this & are there tax implications for us
Submitted: 3 years ago.
Category: Tax
Expert:  TonyTax replied 3 years ago.
Hi.

Trusts used to have tax benefits attached to them which is why in 1997, the new government put in place rules and high tax rates (50%, now 45% on income) that took away most of the tax advantages they previously enjoyed. Take a look here and here for information on the income tax and inheritance tax implications of setting up a trust. The trust would need to complete a tax return to disclose the income and there may be IHT implications when the property is taken out of the trust. Your daughters would need to lodge tax repayment claims with the tax office to reclaim tax paid by the trust and imputed to them with the income.

If I were you, I'd probably wait until your daughters reach the age of 18 to buy the property in their names to avoid complications though with the property market seemingly in recovery mode right now, that may not be such a good idea.

I'm not an expert on the law around trusts but I would only consider buying a property in trust for a short period if there was a way of avoiding the tax formalities which I doubt there is and it hardly seems worthwhile to risk all that if your daughters are 18 in March 2014. You might consider consulting a trust lawyer to see if there is way of the property being held for them but not in a formal trust arrangement.

I hope this helps but let me know if you have any further questions.
Expert:  TonyTax replied 3 years ago.
I can see that you have read my answer to your question. If you have any more questions, please don't hesitate to ask them. If not, please rate my answer so that I am paid for my work. Thanks.
Customer: replied 3 years ago.


'I'm not an expert on the law around trusts but I would only consider buying a property in trust for a short period if there was a way of avoiding the tax formalities which I doubt there is'


 


Well this is the question I am wanting the answer to, and with respect you are unable to answer this question. So basically I have paid for nothing. And while on the subject, the amount quoted me was £33, so why has a further £11 been taken from my credit card?

Expert:  TonyTax replied 3 years ago.
I don't get involved with payments so you will need to contact just answer for a refund. You can do that from here.

I've spoken to a former colleague who specialises in trusts and he is of the opinion that you should avoid buying a property in trust because of the tax implications, particularly since it will only exist for a very short period before your daughters are all 18.

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