What To Consider When Helping Your Children Onto The Property Ladder
December 7, 2022

We all know that the property ladder is harder to get on than ever, and property prices can seem unachievable to young adults early on in their careers. If you’re a parent, you are probably considering how you can help your children to buy their first property – and here we take a look at what you should consider before you make any financial commitments.

Plan For The Long Term

So, how can you help your children get on the property ladder? If you have savings, then you could decide to help your child out by gifting or loaning them a lump sum of money that forms their deposit. Of course, when you do this, make sure that you have enough money left to live on, as you don’t want to be leaving yourself short. Also, if you have more than one child, will you need to do the same for the other child(ren)?

A Deed Of Trust

The legal implications of helping children onto the property ladder can be slightly different if they are purchasing with someone else – either a friend or partner. Legal experts, such as those at Bowsers, can help by drawing up a Deed of Trust, as known as a Declaration of Trust. This deed will specify your financial contribution so that it is protected from the other person.

Tax And Other Implications

Aside from stamp duty land tax, there are other tax implications to take into account when helping your child to buy property. If you have a beneficial interest in the property or have agreed to share any profits made on the increased value of the home, this could leave you open to capital gains tax – so seek further advice before pursuing this avenue.

Equity Release Reduces The Value Of Your Estate

If you do not have savings but still wish to help your children, then you may be tempted to release equity from your own home. Bear in mind that while this can give you money upfront, it can also leave you with less of an estate to leave your children after you pass away. A legal professional who understands the implications of equity release should always be consulted before you make any decisions on this.

Getting onto the property ladder young can be a wonderful opportunity for your children, and wanting to help them is natural. However, it’s important to take all these considerations into account before making any purchases, so get in touch with Bowsers Solicitors for more advice on the best way to go about supporting your children

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