You want to help your child buy a home, but how do you do it? There are many ways to help. Get a second opinion before you start looking at properties!
Recently, a couple were buying a house with the intention of transferring the property to their daughter in a few years after she had built up her savings.
We highlighted that the consequences of this approach included:
- Double transfer duty
- Double registration fees for the mortgage & transfer documents
- Capital Gains Tax
- No asset protection
A different approach to avoid these unwanted consequences was to buy the property in a Family Trust – using a company as the Trustee. Other benefits included that for as long as the Trust owns the property, the parents control the trust and decide when their daughter can become the controlling Director.
Our estimate was a $38,000 saving for a $2,000 investment – plus the asset protection benefits if anyone encountered financial difficulty or if their daughter made any poor choices