BUYING A HOUSE IN SONS NAME?

johneym

I am a first time buyer buying a house. No mortgage.I wonder about the possibility of putting the house in my son’s name. Of course I would be signing for him as he is not yet of age, but I would like the property to be in his name. Is this a problem,complicated or extra work? Some basic information about putting the house in my sons name is all I ask. As for my reasons I would have thought to be honest that that is a private and personal matter and has no bearing on the information sought? But if you must know, it is something that my wife and I decided long ago. We basically want to set him up for life and can think of no better way of doing it than this. We want security for him and to be sure of that. The house will not be used as an asset or collateral by either of us against any loan. And we want to make sure this always remains so. There is also no guarantee that my wife an I will be together in say 10 years time and we want there to be absolutely no issue regarding the house and our son. We are both in agreement on this. Of course we may well be still together and probably will be but we want to secure our sons home now.
Our reasons are simple and genuine.
I will be paying for the house. There is no doubt about that.
Sorry but a lot of above was an e-mail to solicitor. He says there is a new law in 2009 which he doesnt know about but for him to investigate is an extra 500 euro.Also he says this is very complcated etc and I get the impression he does not want to do it.
DOES ANYONE KNOW ABOUT THIS OR CAN IT BE DONE?

THANKS IN ADVANCE.

JOHNEY

Thoie

Unfortunately the 500 quid to the solicitor will probably be your best bet.

Gift tax/CGT may come into play. The banks probably won't lend to someone under 18, even though it's you paying the mortgage. You can probably have him named on the deeds, but that might leave him liable for the debt if anything goes wrong.

There are also downsides to the whole thing - if there are any special FTB allowances when he goes to buy a house at some stage when he's older, he'll lose out on those. Current FTB allowances probably aren't given to children, so you'd lose out in the short term. If, for example, both of you lost your jobs, you probably wouldn't be eligible for mortgage interest allowance from the HSE as you don't own the property.

An easier solution would probably be to draw up some kind of agreement with your wife (and a solicitor) stating what would happen to a joint owned property in the case of a split up.

johneym

Thanks Thoie for the reply,
that was quick.

I am afraid you didnt read the post completely. There will be no mortgage. I have savinigs, combined with the falling house prices all I need is 10000. This I have borrowed as a personal loan from AIB. There is no loan taken against the house.

As for gift tax I thought this was when I already own a property and want to pass it to my son, which is not the case here.

Johney

tenchi-fan

An obvious piece of advice is to go to a solicitor who knows the law without trying to get you to pay €500 for him to do his homework!! The cheek!!

Gift tax only comes into play after €430,000 or so of gifts from parents.

Technically wouldn't you be buying the house in YOUR name and transferring it into his? Under 18s can't enter into contracts. I have no idea how trusts work so a solicitor should be able to advise you on how to buy a house in trust for a family member.

Thoie

johneym wrote: »

As for gift tax I thought this was when I already own a property and want to pass it to my son, which is not the case here.

I think (but stand to be corrected) that money is included in CGT (or gifts) as well. The way it was explained to me was as follows (using totally made up figures).

Say I'm allowed receive 500k from my parents before any CGT is due.
When I'm 10 they give me 200k towards a house - whether they buy the house and put it in my name, or sign over their house, or give me a wad of cash is irrelevant - they've given me 200k.
When I'm 20 they give me another 100k for whatever reason.
When I'm 60 they die, and leave an estate worth 600k.

During my life time they given me, in one form or another, 900k. I then have to pay CGT on the 400k.

To a certain extent it's irrelevant whether you give your son the house now, or when you die - the total accumulates over his lifetime. The value of the property at the time of gifting is what would count, so it's a bit of a gamble, but earlier is probably better.

Anyway, the main answer to your question is that yes, it's more complicated than a straightforward purchase, but yes it should be doable. Personally I wouldn't do it (what if my son turned out to be a dodgy investment banker at the age of 22 and the house was seized by the Criminal Assets Bureau from under my feet, what if he turned into a coke addict and sold the house to buy drugs...), but if you want to I don't know of any reasons why you couldn't.

newbie2

IMO, talk to a solicitor.

QUESTION: How much is free legal advice worth?

ANSWER: Exactly the amount you pay for it.

johneym

thanks for replies guys,

I take it then nobody has ever done such a thing?

tenchi-fan

Thoie, it's not CGT, it's Capital Acquisitions Tax. And that really doesn't really come into it for the OP.

I'd imagine his main issue is regarding stamp duty and the mechanics of actually getting the house in his son's name. His solicitor doesn't know the answer because maybe it's more a query for an accountant or a solicitor who has dealt with this kind of transaction before.

However, the short answer is it can be done!!

OP, I know you said this isn't a personal issue, you just want legal advice.. but you did say you want to "set your son up for life" so I'm going to comment.

As Thoie said, you don't know what your son will be like when he's 18. 18-25 can be a pretty crazy time for some people. He might use it as security on a disastrous business venture. Or he might meet a nice girl who bleeds him for every penny.

It won't teach him one iota of financial responsibility. He might think he has it made so when he leaves school he will just look for a job with easy money because he's already living overhead free. How would you like if your son was happy enough working on minimum wage or on benefits because he figured he had plenty of money left over by not having to pay rent or a mortgage?

Or (even worse) he might feel it's something you held over his head all his life.

What's wrong with encouraging him to save a deposit for a house and paying a mortgage? And in the future he needs a bit of help with college fees or renovations to a house he bought you can be there with your cheque-book? (edit: maybe even helping out with the deposit)

I'm only playing devils advocate here & I hope you find that advice helpful because I'm not trying to put you down.

johneym

Tenchi, I am a first time buyer so no stamp duty. You say this can be done? How do you know this? Thanks, Johney

Thoie

Thoie wrote: »

I think (but stand to be corrected) that money is included in CGT

tenchi-fan wrote: »

Thoie, it's not CGT, it's Capital Acquisitions Tax. And that really doesn't really come into it for the OP.

That's what I get for posting at that hour of the night

JuliusCaesar

Seriously, there's no such thing as setting somebody up for life. He gets married, he gets divorced: wife entitled to half the house, they sell it and he has to buy another. Seriously, if you don't have a house yourself (seeing as you're a first-time buyer) why not do the more usual thing and buy one for yourselves? Leave it to him in your will. There's a reason why most people do this!

Tipsy Mac

http://www.revenue.ie/en/tax/cat/leaflets/cat1.html

There's a €521,208 ceiling for a gift to a child where no tax will apply. You would be best to transfer the money to your son's bank account and then he purchase the house from that, this will leave a trail should there be any issues in the future with where the money came from and how he was able to purchase a house at his age with no mortgage. If you purchase the house and then transfer it to him there will be a good €5k plus of expenses involved in the transfer which is pointless.

dearg lady

Seriously get some proper legal advice, there's a lot of variables here, ie whether you buy the house, then trf to him, whether you trf the money and buy the house in his name. You will need to look at CAT and stamp duty(even though you are first time buyer this may come into play depending on how the trf is done)
I would get advice from a solicitor and tax advisor, they would be able to tell you the best way to structure this. there are other ways too, eg someone above mentioned trusts.