Once your child gets the keys of their first property you can safely say they are true adults. This has long been a rite of passage for both kids and parents. However, the property market today is quite chaotic and your offspring might need some help getting into the property ladder. Here’s how to offer the best support and help.
Encourage them to save
It’s much easier to save when you have a goal in mind and what better motivation than saving for a home of one’s own? So, make sure to encourage your child to open up an individual savings account as soon as possible. It’s important to start early, because the longer the save, the bigger the money growth. Investing money on monthly bases makes the saving more than achievable even if you have kids who are very low on cash.
Invest in a second property
If you have plenty of money, you can buy a second property and take your children as tenants. If you’re willing, you can even make your children joint owners. Additionally, seniors who are planning to move to any senior aged care accommodation like retirement homes at Mark Moran Vaucluse can even gift their home to children. Oftentimes, this process is quite simple (you only need to add your child’s name to your home’s title.) But, make sure to consult with experts—this act can often be considered a transfer of property.
Be a good gift-giver
One of the easiest ways to give your kids a good welcome into the property ladder is to give them some money as a present. This monetary gift will not only help them make a good buying decision but also ensure they get the best mortgage deals. Today, everything from 10 to 25% of the total value of the property is enough to get a good mortgage. However, even though there are no tax limits on how much money you can gift to your children, you might want to consult experts and check whether your money could be subjected to an inheritance tax.
Become a lender
Do you know that the Bank of Mom and Dad is one of the top ten mortgage lenders today? Every year, parents make loans of over $5 billion to their children all over the world. So, if you want to help your offspring break it into the real estate market without saying goodbye to your money forever, consider giving them a loan. This way, your kids will get a good head start and you can profit from interest every month. Make sure to hire a good property solicitor and come up with a good ‘promissory note’ that will make your agreement formal and set a good payment schedule.
Follow the seven-year rule
If you want to avoid inheritance tax, you can take advantage of the seven-year rule that enables you to give money to your kids (or anyone else) without any tax as long as you make the transfer at least seven years before your death. However, you must be careful with this, because things can get very complicated very fast if you get sick. Make sure to get proper legal and financial advice in order to give your money in the most tax-efficient way.
Once your children receive your help, they can truly become independent and start concentrating on their future and future happiness. It’s the best gift you can give to your children!