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Purchasing Property in the name of our Children
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Guest
Purchasing Property in the name of our Children
....I am interested if anybody sees any advantages and/ or disadvantage to purchase a property in our childrens names. (Children living in UK..over 18 years old)...would this count ref the 7 year inheritance tax (UK) ruling..and should the Children be obliged to submit a tax return to the Portuguese tax office each year and finally if we (Mother and father) live in the property....rent free....!! any problem here??
Appreciate if anybody hasa view....or Biffa has a professional one ???
Thank you..
Appreciate if anybody hasa view....or Biffa has a professional one ???
Thank you..
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gareth cade
For wat it's worth, here's what we did:
In February/March 2002, having decided to buy a property in Portugal, my wife and I took professional advice as to how to structure the purchase in such a way as to:
a) ensure that our purchase complied with all relevant Portuguese and UK legal and tax requirements and was as simple and straightforward as possible;
b) mitigate against a future purchaser of the house having to suffer Portuguese SISA (property transfer) tax; and,
c) gift the bulk of the value of the house to our four daughters (to mitigate against future inheritance tax liability) whilst retaining effective control over the asset.
We took formal advice from our Portuguese lawyer and from the XXX Group in Guernsey. We also took into consideration some less formal advice we received from YYY.
In brief, the advice we received was as follows:
Incorporate a UK company specifically established to act as nominee.
The Company to become the legal owner of the property and to be registered as such in the Portuguese Registry
The Company to hold the property as nominee for the Beneficial Owner(s) (shareholders) of the Company. In order to achieved this, the Company signs a Nominee Agreement stating that it holds the property as nominee for the shareholders. This would also result in the Company having no liability to tax in the UK.
For UK resident shareholders, the nominee arrangement also avoids the issue of “shadow directors” and the resulting “benefit in kind” assessment that might otherwise arise.
Whilst the Company is UK resident for tax purposes, it is only acting as a nominee for the Beneficial Owners and is therefore transparent for UK tax purposes. Any income or gains arising become taxable on the Beneficial Owners in their personal capacity. It should be emphasised that the principal reason for using a company is not to alleviate any tax responsibilities in the UK but to avoid legally any liability to SISA on the future sale of the property. By selling the shares in the Company, as opposed to the property itself, no liability to SISA arises.
The Company’s shares be split into 4% ordinary “A” shares and 96% ordinary non-voting “B” shares (that have full rights to capital but no right to income). The “A” shares to be owned jointly by my wife and myself and our four daughters to own a quarter of the “B” shares each.
Having identified a suitable house, we went ahead with the purchase on the basis outlined above and completion took place on 30 April 2002.
It seems to be working thus far - just have to survive another five years to beat the inheritance tax issue!
Good luck!
In February/March 2002, having decided to buy a property in Portugal, my wife and I took professional advice as to how to structure the purchase in such a way as to:
a) ensure that our purchase complied with all relevant Portuguese and UK legal and tax requirements and was as simple and straightforward as possible;
b) mitigate against a future purchaser of the house having to suffer Portuguese SISA (property transfer) tax; and,
c) gift the bulk of the value of the house to our four daughters (to mitigate against future inheritance tax liability) whilst retaining effective control over the asset.
We took formal advice from our Portuguese lawyer and from the XXX Group in Guernsey. We also took into consideration some less formal advice we received from YYY.
In brief, the advice we received was as follows:
Incorporate a UK company specifically established to act as nominee.
The Company to become the legal owner of the property and to be registered as such in the Portuguese Registry
The Company to hold the property as nominee for the Beneficial Owner(s) (shareholders) of the Company. In order to achieved this, the Company signs a Nominee Agreement stating that it holds the property as nominee for the shareholders. This would also result in the Company having no liability to tax in the UK.
For UK resident shareholders, the nominee arrangement also avoids the issue of “shadow directors” and the resulting “benefit in kind” assessment that might otherwise arise.
Whilst the Company is UK resident for tax purposes, it is only acting as a nominee for the Beneficial Owners and is therefore transparent for UK tax purposes. Any income or gains arising become taxable on the Beneficial Owners in their personal capacity. It should be emphasised that the principal reason for using a company is not to alleviate any tax responsibilities in the UK but to avoid legally any liability to SISA on the future sale of the property. By selling the shares in the Company, as opposed to the property itself, no liability to SISA arises.
The Company’s shares be split into 4% ordinary “A” shares and 96% ordinary non-voting “B” shares (that have full rights to capital but no right to income). The “A” shares to be owned jointly by my wife and myself and our four daughters to own a quarter of the “B” shares each.
Having identified a suitable house, we went ahead with the purchase on the basis outlined above and completion took place on 30 April 2002.
It seems to be working thus far - just have to survive another five years to beat the inheritance tax issue!
Good luck!
Property purchase
Yes a well thought out structure. Does Mr Cade want a job?! 
Company migration
Unfortunately there is no possibility of moving a company to the UK as UK company law does not allow it.
If you have done nothing my advice is to sit tight now and lets see what happens in April when the tax demands are issued. 2003 has gone so there is nothing you can do about that now anyway.
There continue to be strong rumours of changes to this tax even now. The property market is as flat as the proverbial pancake due to the property tax changes - not just the offshore stuff but in general as it has far reaching effects for all.
If you have done nothing my advice is to sit tight now and lets see what happens in April when the tax demands are issued. 2003 has gone so there is nothing you can do about that now anyway.
There continue to be strong rumours of changes to this tax even now. The property market is as flat as the proverbial pancake due to the property tax changes - not just the offshore stuff but in general as it has far reaching effects for all.
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gareth cade
BEER!
Only just seen this! Beer sounds good but may have missed you?
We move offices tomorrow so landlines will be disrupted but try anyway on 282 340480 if you like.
We move offices tomorrow so landlines will be disrupted but try anyway on 282 340480 if you like.
Moving experience
Gazza
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Virtually next door - number 21 -next to "SLENDER YOU" (!!?##**)
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