|Holiday house in childrens names?

Discussion in 'Real Estate' started by King Doofus, 8th May, 2008.

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  1. King Doofus

    King Doofus Member

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    HI all,
    My husband and I would like to buy a small holiday house, is it possible to buy it in the children's names? We own the house we live in, and rather than leave the holiday house to them when we die, it would already be in their names, thus avoiding complications and taxes on their inheritance. We are in our late 40's and the kids are 13 and 14 at the moment.
    Thanks for any advice.
     
    King Doofus, 8th May, 2008
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  2. islandgirl__

    islandgirl__ Well-Known Member

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    I have it vaguely in my head that children under 18 cannot own property. What we did is set up a Discretionary Trust with you as the trustee. Then when they are old enough you can change the trustee.
     
    islandgirl__, 8th May, 2008
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  3. Simon Hampel

    Simon Hampel Founder Staff Member

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    Minors are taxed at prohibitively high levels above a very small threshold - so any income they receive would be taxed badly.

    I agree with islandgirl - a discretionary trust is a good way to do it - although possibly a bit costly for only one asset (you can buy other assets that you also want to hold for the future benefit of your children in the trust too).

    Alternatively, you could also look into testamentary trusts, which are created upon your death - they are a useful tool for estate planning.
     
    Simon Hampel, 8th May, 2008
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  4. Jacque

    Jacque Jacque Parker Premium Member

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    Downside with purchasing in a family trust is land tax. Check out rates and rules in the state you're intending to buy in.
     
    Jacque, 8th May, 2008
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  5. DaveA__

    DaveA__ Well-Known Member

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    But if its a holiday house and isnt planned to be rented out then this isnt to much of an issue. However CGT would still apply if it was sold. But i still dont think you can buy a house before 18, so yes a trust would be the only way to do it (apart from your names).
     
    DaveA__, 8th May, 2008
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  6. Simon Hampel

    Simon Hampel Founder Staff Member

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    Ahh good point - I was assuming they were talking about a short-term holiday rental.
     
    Simon Hampel, 8th May, 2008
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