signing property on long lease to school to pay fees?

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

    signing property on long lease to school to pay fees?

    Hi new to this forum. would appreciate any advice.... I have a property whose value is £140.000 with a rental yield of £550pm no mortgage. I would like to sign the property(35 year lease perhpas) over to a prep school to pay school fees (theyt would then collect rent) is this possible to do? i have mentioned the idea to a school and they suggested I get an accountant to draw up the plan and they will look at it.
    any help most appreciated

    regards
    Simon

    #2
    You should discuss the terms of lease with a tax accountant and find out who pays the tax for 35 years ?

    I would not expect any child to stay at same school for 35 years ????

    Comment


      #3
      Hi thanks for your reply....the children would only be at prep school for 5 years the property would be held by the school until the end of the lease (to pay the fees!!!!!) 550pm over 35years at 2% is going to be something like £200,000 plus income for the school a bit more than the fees. the tax on the income would be paid by the school? my main question is whether its legal to sign lease to a thrid party for this kind of arrangement, and if there are any tax implications of signing over of that property to a third party ie/ school

      Comment


        #4
        As you will be gaining from it the disposal to a Charity (ie the Prep School) will give rise to a chargeable gain.

        The school will be liable to tax on its investment income

        Would it not be better for you to enter into a loan agreement with the school whereby you pay the fees in effect over a longer period of time than your child is at school for and the school take a first charge over the property as security. This avoids them getting involved in property maintenance issues and avoids you having to pay CGT on the disposal

        Comment


          #5
          If you are the freeholder of the property in question i don't see why it would be a problem creating a 35 year lease. As sgclacy mentions this may create some sort of CGT liability to yourself. Of course if the property is your main home or there has been no increase in value since you bought it then there will be no tax liability. There is also an annual exemption in regard to the first £10,600 of capital gains.

          If you are a leaseholder yourself, then you may be able to create a sublease, providing your lease allows it. The term will have to be less than the period still remaining on your lease. Again there may be a CGT liability.
          I accept no legal responsibility for comments/advice I make on this forum. Please check with a solicitor before acting on statements made in a public forum.

          Comment


            #6
            thanks siva and sgclacy. both bare consideration. i think ill go ahead and chat with an accountant to work up the best way to present it to the school first.

            Comment


              #7
              Originally posted by simon888 View Post
              Hi thanks for your reply....the children would only be at prep school for 5 years the property would be held by the school until the end of the lease (to pay the fees!!!!!) 550pm over 35years at 2% is going to be something like £200,000 plus income for the school a bit more than the fees. the tax on the income would be paid by the school? my main question is whether its legal to sign lease to a thrid party for this kind of arrangement, and if there are any tax implications of signing over of that property to a third party ie/ school
              You need a solicitor to check the wording of your lease to see if you can sublet for 35 years.

              The other way may be to use an offset or flexible mortgage :


              http://www.telegraph.co.uk/finance/p...hool-fees.html

              Comment


                #8
                My goodness you must really want your kids to go to that school! Your choice, but just seems one of the strangest questions I have ever seen asked here...
                Unshackled by the chains of idle vanity, A modest manatee, that's me

                Comment

                Latest Activity

                Collapse

                • Reply to Levy
                  by Tipper
                  Can you expand...levy for what?
                  18-05-2022, 19:12 PM
                • Levy
                  by scot22
                  What details must be given in an invoice for a levy ?
                  18-05-2022, 17:43 PM
                • on -going leaks
                  by finest1
                  Hi All,

                  The flat upstair has been leaking for some years. The ceiling soon partially collapsed stopping me fro m letting the flat. The leaseholder upstairs kept claiming that the leak was not coming from her flat despite sending them photos of her wet subfloor. I sent a letter claiming...
                  18-05-2022, 17:09 PM
                • Reply to on -going leaks
                  by JackBluebird
                  On one hand people may argue, the freeholder has rights to access and assess the property in accordance with the lease whenever it is reasonable or essential to do so. However if you initiate the disrepair protocol you will have much more leverage, but it is not for bluffing...


                  ...
                  18-05-2022, 18:17 PM
                • Insurance
                  by jazzythumper
                  When the freehold of our building was sold, the old freeholder cancelled the buildings insurance which we had paid for in advance through our service charge.

                  A new policy was taken out by the new freeholder. A refund for the previous policy has been given to the previous freeholder but...
                  03-04-2022, 20:24 PM
                • Reply to Insurance
                  by jazzythumper
                  I’ve managed to get the refund from the previous insurers, which is good, over £1,000 that we wouldn’t have had otherwise in our funds.
                  18-05-2022, 15:51 PM
                • Breaches of Model Articles
                  by Starlane
                  ram Our articles require a quorum for board and for shareholder meetings. It has come to light after the event that a director has called a meeting on their own and appointed another director, the meeting was inquorate and no members were made aware that this was going on, additionally no meeting has...
                  06-05-2022, 16:02 PM
                • Reply to Breaches of Model Articles
                  by Starlane
                  The Articles require a quorum for the board and shareholders, one of the directors sold their flat...I was not aware and find out months later that the director has been acting on their own then a new shareholder came onboard and again did not know that he had been appointed a director.They wont call...
                  18-05-2022, 15:38 PM
                • Section 20 notice of planned works not disclosed by vendor
                  by Lexa
                  Hi all

                  I purchased a flat last August and asked my solicitor specifically to check if any section 20 notices for planned works have been served. Their report dated 31/07/21 states no and so does the Leasehold Management Pack issued by the Manco dated 8 June 2021. I now received a letter...
                  05-05-2022, 12:56 PM
                • Reply to Section 20 notice of planned works not disclosed by vendor
                  by Lexa
                  @sglacy - The works the notice has been served for are part of a cyclical decoration programme on the wider estate and there was no way to foresee any works being planned without being made aware of the notices or plans of works. It might have been evident to the vendor but not to me. The point is...
                  18-05-2022, 13:20 PM
                Working...
                X