A recent report by www.daft.ie suggests that the housing market in Ireland is starting to show an upward trend. This is not just in Dublin either, but right across the country with price increases of 2.3% between January and March this year, outside of Dublin.
One reason for price increases all over the country is the lack of housing stock available on the market. Information suggests there are 20,000 less properties available for sale than there were in March 2012.
This lack of stock has boosted houses price and provided some heat in the market. However, this does bring us back to the common question of how young people can get onto the housing ladder with property prices growing month on month at a shocking rate and the impact of the recession still biting.
One option being considered by some parents is purchasing investment property for their children. This may seem like a good move for both you and your children, but what should you consider before embarking on this bold move?
Firstly, the old saying of location, location, location will be the primary factor in whether this is a sound financial move for you to make or not. An investment property must make money, whether you rent it out until your children are ready to move in or gift it to them to sell on. The location of the property you buy will have a large impact on its profitability.
Dublin house prices are rising dramatically, in some cases up to 15%, so this looks to be a better place to invest than the rest of Ireland, which is only showing increases of just over 2%. However, with such low housing stock, it may prove more difficult and costly to purchase in Dublin.
If you do decide to go ahead with a property investment for your child, whatever the location, there are a number of other considerations to make, the most important of which will be your tax liabilities. In addition, you will need to consider what you will do if you do not think that your child is responsible enough at 18 or at 21 to take on the responsibility of an investment property.
Your final consideration should be whether you can actually afford to purchase this property for your children, with the cost of living rising all the time and your life expectancy increasing, should you consider clever tax planning for your estate once you die instead?
Whether you decide to buy a property for your child or not, it is essential to get specialist legal and tax advice so you are able to protect yourself and your children.
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