In the past responsible parents would consider their job done when their children were fully educated for the work they had chosen.
Increasingly parents and grandparents today are having to help their children buy a first home – they are referred to nowadays as the Bank of Mum and Dad.
Things to be aware of:
If you are helping your children out with buying a house – beware the tax man.
If you buy a property either jointly with your offspring or in any other way involving your ownership of that property, you can be taxed on any gain in value.
Capital Gains Tax
There is a capital gains tax on property sold within five or 10 years of purchase. Your children may decide to sell the house within this period so you may need to be aware of this.
The time varies depending on when the property was bought, whether it is a new build and the tax law at the time acquired. It’s called the Bright Line Test. It was designed to help take the heat out of the property market.
Of course, with falling property prices this might not be an issue.
