Buying for grandchild

antoneyz

Anyone know the ins and outs of buying a house/apartment for a grandchild of one year old. Would I have to tell the mother of the situation or would just my son's ok who is the father be enough.
Any help would be greatly appreciated.
Regards Anthony

seamus

You don't really have to tell anyone; it depends on how you want to do it.

If you want to buy it and put it in his name, that likely requires the creation of a trust that owns the property and manages it in his name - this could be one of the parents, but then you have pain there. There are also tax liabilities to that, and a whole mess of legal problems.

The most sensible course of action however is to simply buy the property in your own name and then update your will to specifically state that the property at X address is to be given to your grandson. If you're alive when he turns 18, then you can just give it to him.

You need to be mindful of CAT, the threashold for grandfater to grandson is quiet low.

Buying it in your name and letting him live there for there years as his main residence prior to gifting it to him would exempt him from CAT however. Talk to a tax adviser before doing anything so you can structure it as best you can would be my advice. He could end up with a very significant tax bill if you were to just give it to him without planning it.

AlanG

+1 for tax advise - its the same liability as giving him cash only a lot easier for revenue to find.

Hope you have plenty of spare cash lying around for any more grandchildren who come along or your actions could tear the family apart in 20 years or so.

Browney7

Jana Fast Archivist wrote: »

You need to be mindful of CAT, the threashold for grandfater to grandson is quiet low.

Buying it in your name and letting him live there for there years as his main residence prior to gifting it to him would exempt him from CAT however. Talk to a tax adviser before doing anything so you can structure it as best you can would be my advice. He could end up with a very significant tax bill if you were to just give it to him without planning it.

Pretty sure that exemption has been tightened up.

Worth considering making use of the small gift exemption of 3k per annum too

Browney7

Browney7 wrote: »

Pretty sure that exemption has been tightened up.

Worth considering making use of the small gift exemption of 3k per annum too

You are correct, it still applies to inheritances but not gifts. More idiotic changes from revenue.

wordofwarning

Speak to a tax advisor. There is ways to transfer cash to a family member tax efficiently particularly if you are a farmer... ie you buy farmland to transfer it to your family member. You will definitely need to consult a tax advisor on the ins and outs of this.

Buying for a grandchild will incur a lot of risk. Are you buying at the top of the market? Will the property be worth less in 18 years? Could you grandchild inherit a sum of money that was twice as large if you invested the money in an index fund instead of a low yield house? Will that child even want to live in Ireland in 18 years?

IMO looking after your grandchild is a lovely thing. But it might not be what they need/want in 18 years. As Schiller says buying house is a consumption choice and not an investment choice.

antoneyz

Thanks for the help with this matter, given me a lot to think about particularly will the kid want to live here when he grows up, know I didn't and coming back to family business still something I regret. Running it not the same as making my own way.

Mrs OBumble

What's more .. if there's something going on in the family which means you don't want the child's mother to know about it- what happens in the parent split up and the kid says with his mother. Even worse if it's acrimonious.

Atlantic Dawn

What will happen to the apartment/house in the meantime until they become 18? Will it be rented out or just be mothballed, who will cover ongoing expenses or take advantage of the rental income. Also is there a restriction on someone under 18 being able to own a house, I'm pretty sure all services like power, gas etc need someone 18 or over to be a customer.

At the moment perhaps buying property is a good idea and in 17 years time the price will have jumped much more than it would if you left them say €250k in a bank account.

The_Conductor

Atlantic Dawn wrote: »

What will happen to the apartment/house in the meantime until they become 18? Will it be rented out or just be mothballed, who will cover ongoing expenses or take advantage of the rental income. Also is there a restriction on someone under 18 being able to own a house, I'm pretty sure all services like power, gas etc need someone 18 or over to be a customer.

At the moment perhaps buying property is a good idea and in 17 years time the price will have jumped much more than it would if you left them say €250k in a bank account.

Legally they have to be 12 years of age for the actual property transfer- if the grandparent is using the CAT exemption for example, if there was a time delineated trust- it would involve a separate change of ownership when the 7 years fully expired- and it would also count towards the parent to child inheritance lifetime threshold.

Its a mess- it will involve a couple of transactions, it will eat into inheritance thresholds on both the part of the grandfather to his son, and subsequently to his son.

Avoiding CAT/CAG etc- may very well be the least of your worries..........

Buy 3000 worth of solid dividend paying shares for him every year and he should have a very nice nest egg in 18 years.