three generation family

Parents worked hard because of their children. The unconditional love of the parents is unfathomable, that is why investing in a property would always be the top priority. But parents must be cautious, prior to writing your child’s name in your acquired condo or HDB flats, some significant points for the home ownership. There are incidents where the children drive away their own parents out of the home. Here are following tips prior to taking an action.


Child own home ownership as the first-time purchaser will be at risk.

The moment the property is under your children’s name, automatically they are now the legitimate owner. Which simply means, unless the home is sold, the problem in acquiring their own HDB unit is foreseen.  In case they decided to purchase private units or property and there is an existing mortgage in the same name (a name that you are paying), this yields to a decreased loan quantum. Ideally, they will only hit 45 per cent instead of the 75 per cent. Also, expect an  ABSD or Additional Buyers Stamp Duty in 12 per cent for the succeeding property and 15 per cent on the next properties exclusive for locals of Singapore, effective July 2018 parallel when the ABDS rates increase by the government.

In a situation where children wish to settle down and you are already halfway paying for that private home or units or difficult to let go of the property, this places you like a jam. This places you in an awkward situation, difficult to tell the young souls, that they need to wait years or more years to have their own space because it was their name written in your investment.


Be cautious in putting your one and property under your children’s name(s)

We often hear this, “never give your one and only home to any of your children. This somehow indirectly gives them the confidence to sell the home, no matter how you explain and instructed them to keep the house for life. This case is often presented in newspaper and televisions, the elderly is displaced from own home and end up in rental places because unkind children betrayed and sold with no consent on the property handed down by parents.

In a scenario where you have more than 1 home, then putting one in their name would not be an issue. But always have the room for future disagreements when both not favourable whether to sell or not. 


The privilege of controlling as to who can occupy the house is gone

We have witnessed a showdown of family, where children and parents end up in disputes over home ownership, as to who is legal to live in the house. Sometimes, children request a favourite aunt, uncle or a  boyfriend or girlfriend, to share the space without any approval of the parents. Also, there are stories where families are divided or split because of dogs or a pet like in a case where, parents want to keep dogs but children are not kind to the dog, so this opted them to leave the place.

Remember,  the moment, the house is documented under children’s name, the power to dictate who stays or not is gone.  This yields in arrangements that are hard to tolerate thus even it shifts a financial asset to a family rift.


Making use of children’s name to avoid taxes provokes trouble

Perhaps we can say, this is another strategy for a homeownership, wherein some people really used. They buy a second property and have it rent. So the rate for tax for that particular rental property is no longer the same, so they put one child as the occupant of the said property instead. Although the property is for rent, still it corresponds to an owner-occupier’s tax rate.

If the authority caught you having such activity, the IRAS or Inland Revenue authority will run after you. Perhaps fines will be given for avoiding tax and if be caught only after 10 years, the sum total you owe would simply selling off the residential property.

However, while the property is not recorded under the rental unit, getting tenants would be tough.

Impacts the social welfare assistance of your children

Jobless children or being in a bad patch and recorded under a property owner impacts their social welfare assistance. For instance, when they need to reach out for Medifund due to health insurance which is drained, inactive or offsetting from GST vouchers, the reputation of their private property weighs against them.

Whichever government offices they will transact for any assistance, expect a response like this, ” How about selling your property and change lifestyle.”


Your children can use your property as collateral for loans

There is a tendency that your child or children may engage in huge loans like a second mortgage, where they can freely avail of it via their name. This scenario put your property in critical condition. The moment they failed to pay the loan, the lender can then foreclose the property.

Imagine, how patiently you pay for the monthly mortgage, of course under your kid’s name which runs for more or less 10 -15 years minus delinquents then one surprising afternoon, a courier hands in a letters stating a loan which reached to $200,000 and you are given 1 month to settle it or else they will pull the property.

The next difficult stuff to do after rebuilding your precious retirement fund perhaps is to forgive your child or children.