Which of us should own our daughter's house?

Q We have just remortgaged our home (value ?450,000) to release equity to purchase an apartment in Manchester for our student daughter to live in at a cost of ?140,000.

She is paying the deposit and contributing towards the mortgage. She will only work part-time through university and will need a tenant to share. I work part time and pay the basic rate of tax on my earnings of ?9,000 a year. My husband earns around ?53,000 and is therefore a higher rate taxpayer. We are unsure in whose name the apartment/mortgage should be for most tax efficiency.

I believe my husband, given his landlord status, can claim tax deductions at the higher rate for rent/repairs/wear and tear etc. But presumably any future capital gains tax liability would be less if the apartment was in my name.

Another option would be for the apartment to be in our daughter's name. Can you please help or will we have to visit an accountant?

LF

A I am a bit confused. I assume the remortgage is on your home and you have effectively used the money raised to purchase the apartment for your daughter, although she has contributed a deposit and is paying some of the mortgage interest.

Your husband will only be able claim tax relief if your daughter's contributions are viewed as a form of rent, which will have to be added to his taxable income. As regards a potential capital gains tax liability, remember you both have an exemption (currently ?7,500) and taper relief if the apartment is in your and your husband's names. Putting it in your daughter's name would represent a gift with reservations, if she is deemed to be paying rent, and there could be an inheritance tax liability should you and/or your husband die. On balance l think it would be a good idea to see an accountant.