Your kids have fled the nest to attend University – to study and get a “good job”. Then, they graduate, but have been struggling to get the job they hoped for and subsequently they return home, unable to take that first step onto the property ladder. This move back home can be very stressful for both children and parents, especially when lifestyles have adapted to the new environment.
You decide you would like to do something to help your child, but all your assets are tied up in your property. Someone mentions a “Transfer of Equity”, whereby you could transfer some or all of the property’s assets to your children and that way, they would have something of their own.
In this case, there are a few matters you need to consider: firstly, the Tax implication of making the Transfer; and secondly, whether your child would be able to draw up a second charge on your property in order to purchase another of their own. Assuming your child is able to obtain the finance for their new property, have you considered what would happen should your child be unable to repay the 2nd charge on your family home? In addition, have you considered the Tax implications? At the very least, there are possible Inheritance Tax implications for you transferring a share of your family home to your children as well Stamp Duty Land Tax considerations for your children as they will be deemed to own two properties. What if your child becomes bankrupt in the future? The share of your property which they own would automatically form part of their estate and it would be for the trustee in bankruptcy to distribute, along with anything else your child owns, in accordance with their duties.
All of the above factors, and more, need to be considered. This has become an increasingly common situation in today’s property market and we work together with our clients, tailoring our services to their individual needs. If this has raised any queries concerning your personal situation in relation to a potential transfer of a property, Inheritance Tax, Trusts, or you simply find yourself in a position to purchase your first property – we are here to help!