Hi
I recently inherited $60k following the death of my mum.
My plan was to deposit the money in an offset account against the loan on my PPOR. I have also recently purchased my first IP.
Another option I am playing with is helping my 16yo son buy his first property. Tonight I was looking through a real estate website and came across what I thought was a fairly good deal at the lower end of the canberra market (its an area ive been researching for the last 12 months or so while looking for my IP). I would be willing to cover all costs until my son was established in a career.
What is the best way to help your children invest?
Would I just be better off waiting a few years for him to earn enough to purchase his own place and help him with the deposit?
My situation is a little complicated in that my husband is my sons step father and is not as motivated as I am to help him financially (not interested at all, ever). The money is mine to do what I want with, however if I put in in our offset account it will essentially become a joint asset and not as easy for me to help my son in years to come (but not impossible either).
My mum helped me buy my first house and I would love her to indirectly help my son too.
Thanks
Carolyn
Hi Carolyn.
May I suggest you contact one of our senior contributors to this forum which is Jamie at Pass Go Home Loans – he lives and works in Canberra and I can personally recommend him to look after you and your aspirations to help your son . I hope the moderator will allow this link to stay so you can contact Jamie. If not his username on this forum is Jamie M.
Totally agree that Jamie is a great guy and long standing contributor to the forum however if your son is only 16 he cannot legally enter into a Contract to buy a property for a couple of years.
Of course you could always look to establish a Family Trust with him as a named beneficiary and buy the property in Trust based on the fact that the property would always be for him.
We purchased a block of 6 x 2 units here in Brisbane a few years ago and renovated them all, selling off 3 and keeping 1 each for the children. They have all chosed their own unit and where they can they pay down some of the debt each week from pocket money or part time job etc.
Course if you Transfer the property into his sole name there are some CGT / Stamp Duty implications however anything can be done.
Cheers
Yours in Finance
Richard Taylor | Australia's leading private lender
Carolyn, this is a structuring question but also perhaps a family question as the answer will depend on personality and motivations of yourself and your son. I was fortunate enough to get a similar helping hand when younger so am now just reminding myself to pass it on to the next generation. I'm also fortunate that I wasn't able to sell and use the proceeds to fund other ventures at that age, the money came before the knowledge to hold and grow it in my case.
Excellent idea about the units Richard, nice to control the body corporate as well.
Hi Carolyn
There are many issues here. A major one being protecting your interest when you deposit the money into the offset account. You have to think about your asset protection as well as consdier the asset protection of your son later if he was to ever get into a family law dispute etc.
One way may be for you to gift to a discretionary trust which you control. This trust could loan the money back to your interest free so you can put it into your offset account.
There may be a way to buy your son a property now. That is through a trust ( bare trust) with you as legal owner and him as beneficial owner. The title could possibly be changed to his name when he becomes 18 with only nominal stamp duty and no CGT. However, there may be problems with financing this sort of arrangement. You also need to consider the FHOG issues and Stamp duty savings.
Maybe you could wait till he becomes 18 an then have your trust lend him the money then when he can borrow on his own and legally own the proeprty
Terryw | Structuring Lawyers Pty Ltd / Loan Structuring Pty Ltd
http://www.Structuring.com.au
Email MeLawyer, Mortgage Broker and Tax Advisor (Sydney based but advising Aust wide) http://www.Structuring.com.au
Thanks for your responses.
I really like the idea of the trust – Terryw, you've definitely given me something to think about!
My son will be 18 in about 15 months, so it sounds like it might be easier to loan him the money then – and in the mean time get him into a regular savings pattern.
Thanks everyone.
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