Buying a house for my kid

shugy

Ive some savings saved up and thinking of buying a small cottage for my child but hes only 2 and living with his mother. What i want to know is this possible to buy it in his name and have the eletric, water bills etc.. all in his name seeing as hes so young or will i have to put it in my name untill hes 18

Paulw

Anyone under 18 can't enter in to a contract (in general), so suppliers can't put a bill in the name of a child. You must take out the bills, in your name.

As for buying the house and putting it in trust for your child, you will need to consult a solicitor for advice on that.

The_Conductor

You could create a legal trust and hold the property for your child in the trust- however- Revenue will still count it as yours- you will be liable for any taxes due (property tax, tax on rental income etc) at your marginal rate. Its messy- but doable.

The only way to cleanly hold it independently of your own assets- would be to create a holding company- and manage it entirely via the holding company. This would entail lodging accounts etc. For the sake of a cottage- its seriously not worth the hassle.

Sit down and talk to an accountant who is familiar with inheritance planning- even if it costs you a couple of hundred Euro- it would be money well spent.

tinkerbell

It's a crazy idea tbh - your child is only 2 and your child may never want to live in it either as they may move away from the area, or it's just not suitable in 20+ years time.

johnnyskeleton

Have you considered a life assurance product for him instead?

shugy

tinkerbell wrote: »

It's a crazy idea tbh - your child is only 2 and your child may never want to live in it either as they may move away from the area, or it's just not suitable in 20+ years time.

Why's it a crazy idea! I'm in the building game and will be putting more money and labour into this house to give to him when he's 18. What kid wouldn't want to be handed a house when they become an adult. He can do whatever he wants with it once he hits that age. I'm scratching my head at why you think its a crazy idea.

Gumbo

shugy wrote: »

Why's it a crazy idea! I'm in the building game and will be putting more money and labour into this house to give to him when he's 18. What kid wouldn't want to be handed a house when they become an adult. He can do whatever he wants with it once he hits that age. I'm scratching my head at why you think its a crazy idea.

For the same reason why you think it's a good idea.
Everybody is entitled to their own opinions.

Gloomtastic!

shugy wrote: »

Why's it a crazy idea! I'm in the building game and will be putting more money and labour into this house to give to him when he's 18. What kid wouldn't want to be handed a house when they become an adult. He can do whatever he wants with it once he hits that age. I'm scratching my head at why you think its a crazy idea.

Handing a teenager a house that they can do what they like with may not be the best option. Maybe wait till they've grown up a bit more - 28-30 years.

Gloomtastic!

Gloomtastic! wrote: »

Handing a teenager a house that they can do what they like with may not be the best option. Maybe wait till they've grown up a bit more - 28-30 years.

What's wrong with giving someone the best start possible in life? Never mind this "wait till they have grown up" nonsense.

Mrs OBumble

I do not think that handing a kid a free house is a good idea. If they don't have to work for it, they won't appreciate it.

it

Arbiter of Good Taste

Trinity Old-fashioned Streptomycin wrote: »

What's wrong with giving someone the best start possible in life? Never mind this "wait till they have grown up" nonsense.

Because most 18 year olds don't know their ar$e from their elbow. Handing them an asset worth hundreds of thousands may not necessarily be the "best start possible in life"

newacc2015

shugy wrote: »

Why's it a crazy idea! I'm in the building game and will be putting more money and labour into this house to give to him when he's 18. What kid wouldn't want to be handed a house when they become an adult. He can do whatever he wants with it once he hits that age. I'm scratching my head at why you think its a crazy idea.

What if he moves to Dublin for college and never returns? He has a house in the country which is a burden. It requires maintenance and expenses to pay. There is the high probably it will barely increase in value. Plus the decor of the house will be totally different to what is popular in 20 years.

I would love and truly appreciate a house from my parents. But you can call me ungrateful, but unless its close to Dublin City, I wouldnt consider living in it. As young person, Dublin City is the only place I would consider living. A cottage in the West, would be totally useless to me

There will be no easily way to give your son the house without CGT implications. A better option would be owning the house yourself and using tax planning to have your son to buy if off you. But you need to speak to an accountant or a solicitor to deal with this.

newacc2015

newacc2015 wrote: »

I would love and truly appreciate a house from my parents. But you can call me ungrateful, but unless its close to Dublin City, I wouldnt consider living in it. As young person, Dublin City is the only place I would consider living. A cottage in the West, would be totally useless to me

Well in fairness that not going to be true for everyone. Dublin and its surrounds are pretty much the last place in the country I want to live and the west (which is where I'm from) is top of the list.

tinkerbell

shugy wrote: »

Why's it a crazy idea! I'm in the building game and will be putting more money and labour into this house to give to him when he's 18. What kid wouldn't want to be handed a house when they become an adult. He can do whatever he wants with it once he hits that age. I'm scratching my head at why you think its a crazy idea.

Because it is a bloody bonkers idea! You want to buy a cottage for a 2 year old. A 2 year old who you say lives with his mother so presumably you are separated. Unless you are both rolling in cash, you'd be FAR better off investing in your son now (putting aside money for every day expenses, holidays, a college fund, etc) - things that he will benefit from now and in the near future, making his life better for him, not this silly dream of buying him some cottage now and it sitting idle for the next 20+ years. He might not ever even want to set foot in it.

It'd be completely different if your child was in his 20s and you wanted to give him a head start in life and gave him money upwards buying a house in a location of his choosing, but buying a house for a 2 year old is just insane. And it's a bit of a kick in the face for his mother too presumably as she'll probably think why can't he spend that money on improving his child's lifestyle now and not for 20 years down the line.

You haven't even answered where this cottage is located? 18 year olds don't really "do" cottages. What do you plan on doing with it til if he even wants it? Rent it out? What if he has no interest in it, will you let him sell it?

And if you want to go along with this idea then it'll probably mean you're eliminating his first time buyers card which will be very valuable to him - all for a cottage that he won't use.

newacc2015

Trinity Old-fashioned Streptomycin wrote: »

Well in fairness that not going to be true for everyone. Dublin and its surrounds are pretty much the last place in the country I want to live and the west (which is where I'm from) is top of the list.

If you are a young professional. You arent going to be a top of your industry in a place like Mayo, where career options are very limited.

Im a Dubliner and therefore biased. But I could never live elsewhere in Ireland

The Randy Riverbeast

The place could very easily become a burden for both of you. The place will have to be maintained and your son might then have to try to sell it.

Chances are he will go to college and move to one of the cities for work. Could always just put the money in a savings account and then give him the money for renting during college or towards a house of his choosing.

pwurple

shugy wrote: »

Why's it a crazy idea! I'm in the building game and will be putting more money and labour into this house to give to him when he's 18. What kid wouldn't want to be handed a house when they become an adult. He can do whatever he wants with it once he hits that age. I'm scratching my head at why you think its a crazy idea.

Do you want the mother to live here with the boy too? But she is to have no ability to control the electricity supplier and the house becomes his as a teenager... Hmm. How do you think that works out with a stroppy teenager.

I wonder Is this your way of 'supporting' them? Making sure the child has a roof over his head, but no way is that woman who bore him or raises him gets anything of it?

If it is, please just support your family properly. Forget this motion.

Wabbit Ears

The road to hell is paved with good intentions.


OP this is an awful idea. My sister has a house in carlow that she was given and its completely not worth the hassle. The rents there aren't great and while it was a free house,she doesn't use or really appriciate it.

She lived there for a while out of a sense of obligation but it really ended up just causing a lot of resentment and arguments. The house didn't have good school links, no shop within walking distance, no good play area for her daughter that they didn't have to drive to.

If you have money do three things.
1 pay maintainance regularly and on time including additional Christmas and back to school requirements
2 setup a trust fund accessible when he is 25. For the purposes of house buying
3 setup a college fund for paying rent and tuition.


Also, spoiling a child isn't giving them the best start in life. There is a huge difference between giving someone a hand and carrying them.

Pawwed Rig

Think people are being a little hard on the OP here and the suggestion that he is currently not providing for the child is frankly outrageous.

OP I would not consider this as viable unless it is in an area where it can generate a rental income.
It should also be in a place where there is some possibility that the child may want to live in future.
You would be taxable on the income until then unless you entered into some tax planning which I am not going to get into here as professional advice should be sought.

1moreyr

I think it is a lovely idea. If you are willing to be a landlord until you pass the property onto your child then why not. I definitely wouldn't hand it to them when they are 18, maybe 25? When your child is old enough to go to college or whatever they decide to do the rental income will come in handy.

For me as a single parent who will always bear the financial responsibility for my daughter I think that it is great that you are thinking ahead.

Paulownia

Would you like to adopt me as well?

Jonotti

He's unlikely to need the house in later life so what you're really trying to do is give him a financial start in life. In true Irish fashion you see house building as the only long term investment. What a country.

pwurple

You would be taxable on the income until then unless you entered into some tax planning which I am not going to get into here as professional advice should be sought.

Good advice here. Get tax advice.

I suspect some tax avoidance is probably part of what the OP is trying to do by putting utilities in the name of a 2 year old.

_Brian

I think the idea is admirable.

I'd be thinking more along the lines of an investment fund to cover college fees-costs.

ComfortKid

Buy the house and rent it out for the next 16 years. Keep all the rent in savings. When the kid is 18 give him a choice, the cottage or the 100k (ish) from rent.

toadfly

newacc2015 wrote: »

If you are a young professional. You arent going to be a top of your industry in a place like Mayo, where career options are very limited.

Im a Dubliner and therefore biased. But I could never live elsewhere in Ireland

There are a lot of young people who hate having to live in Dublin. I know loads who live there because they have to but most of them want to get out. I could get a job in my field in Dublin on a hell of a lot more but much prefer to live in the west. You couldn't pay me enough to live in Dublin. Probably wouldn't pay you enough to live in the west but don't dismiss people who want to live anywhere but Dublin.

OP I also think it's a bad idea. You should get investment advise before deciding anything as it could be a complete waste of money. Also do t give whatever you decide on at 18, he will likely piss it away. Late 20s would be better IMO.

The_Conductor

ComfortKid wrote: »

Buy the house and rent it out for the next 16 years. Keep all the rent in savings. When the kid is 18 give him a choice, the cottage or the 100k (ish) from rent.

I don't think you quite comprehend how onerous taxes are on landlords here....... If the OP builds the house themselves- they only get to account for material costs towards the mortgage. 75% of the limited mortgage interest is an allowable cost. Property tax- isn't even an allowable deduction (yet anyway). Were the OP to let out the property- the vast bulk of the income is taxable at their marginal rate- incl. of USC- aka north of 50%....... Allowing for paying back any capital costs at the outset- you'll have sfa to show for the investment- other than the asset itself- clear and free- in 20 years time.

The main beneficiary of private landlords- is the taxman. The secondary beneficiary- are the bankers. Only after these two parties do the tenant and the landlord themselves feature.............

OP - I think it is admirable to want to provide for your son's future but that your money could be better invested.

If you are set on buying property consider student accommodation in a nearby college town. It will earn income in the meantime and there will be a place available if he goes to college there.

Others can advise you on the pitfalls of being a landlord. I would speak to a solicitor for some estate planning and tax advice.

dixiefly

Where does the mother of the child come into this? It sounds like ye are broken up.

As indicated by the posts above this could be a good idea and it also could be a not so good idea. I think that something should be jointly agreed with the mother as she is living and caring for the child day in and day out and this should not be something that she does not know about or agree with.

If the area seems good, she is agreeable and you can generally improve the place then it could be a good idea but there are a few ifs there.

Gerry T

It's a brilliant idea if the house appreciates in value and you can rent it out for the next 20rys. You will be handing him an asset he can use at his disposal. He can move in, rent, sell. As for business and living it's more and more common for people to work from home with IT advances and in 20 yrs the conventional office as we know could be gone, I'm a dub but would love a house in the West, its a fantastic place on the planet don't mind Ireland.

newacc2015

newacc2015 wrote: »

If you are a young professional. You arent going to be a top of your industry in a place like Mayo, where career options are very limited.

Im a Dubliner and therefore biased. But I could never live elsewhere in Ireland

For a start that's not true, Galway is the Capital as for as medical devices is concerned for instance if you are in that game it's the place to go. It's also an IT hub with lots of IT jobs (thousands commute to galway from Mayo along with having some big companies in Mayo also). Limerick also has some big companies with highly skilled jobs.

That aside many (and I'm very much one of them) would much rather be a rung or two below the "top" of the industry and live where they want rather than be forced to live in Dublin and that's before taking into account the considerable difference in cost of living which more than compensates for possibly having a lower salary. I personally don't even include Dublin in a search if looking around at available jobs as I would hate to have to live there.

There are many manny people the same who want to live where they grew up or in other parts of the country and they would massively appreciate getting a house in the area from their father. Imagine how much better off financially you would be if you never had to pay rent or a mortgage.

Wabbit Ears

Its also silly for a parent to decide for a two year old where it will want to live when its grown up, best intentions aside.

That said, Im as bad as the OP, I bought an apartment abroad as a gift for my kid to sell on when they need money to buy their own place but now I have two kids and nowhere near as much disposable income. I couldn't buy a second property for my second kid so the plan is all up in the air. Also, the rent doesnt cover the cost of the apartment and is in negative equity, so while my kid will get good money for it, it was a really bad investment for me.

January

Wabbit Ears wrote: »

Its also silly for a parent to decide for a two year old where it will want to live when its grown up, best intentions aside.

That said, Im as bad as the OP, I bought an apartment abroad as a gift for my kid to sell on when they need money to buy their own place but now I have two kids and nowhere near as much disposable income. I couldn't buy a second property for my second kid so the plan is all up in the air. Also, the rent doesnt cover the cost of the apartment and is in negative equity, so while my kid will get good money for it, it was a really bad investment for me.

That's another thought. OP if you have more kids can you buy more houses?

the_syco

shugy wrote: »

What kid wouldn't want to be handed a house when they become an adult.

Are we to assume the cottage is in Dublin 4?

Noo

Deleted User wrote:

If you are set on buying property consider student accommodation in a nearby college town. It will earn income in the meantime and there will be a place available if he goes to college there.

I know someone who did this. They live in the country and bought an apartment in the nearest city (a college town) for their daughters when they headed off to college. Rented it out in the meantime. Fast forward 15 years and the oldest has gone off the college in said city....but renting with friends in a share house. It worked out better for them to keep their tenants where they were and find somewhere else for the daughter. Not everything goes to plan.

Sleepy

OP, if you're intending to provide a stable place for your child and his mother to live while he's growing up why not suggest it to the mother?

If she goes for it, you could draw up a lease for a nominal amount e.g. 1 euro per month thereby helping ensure he has a stable home for his childhood?

Mrs OBumble

Trinity Old-fashioned Streptomycin wrote: »

It's also an IT hub with lots of IT jobs (thousands commute to galway from Mayo along with having some big companies in Mayo also). Limerick also has some big companies with highly skilled jobs.

I work in IT in Galway.

I cannot even remember how many younger people I've met here who got a job in Galway when they came out of college, but after a year or two were itching to get up to the bright lights and bigger opportunities of Dublin.