Why invest into a holiday home for your children

  • 4 years ago
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Buying a holiday home for your children: why do it?

Buying a property for their children is the desire of many parents. Times have changed: leaving your money on the bank is not as secure as it used to be and the younger generation is less likely to invest in their own home early on. Previously, banks granted mortgages more generously. Today, however, especially for young adults, it is increasingly difficult to buy a house. It is often the parents who take this step in order to create a secure living space for their children – even abroad.

Why buy a vacation home for your children?

There are several reasons to buy a holiday home and then register it on your children’s names. One of the most frequent reasons is to avoid a double change of ownership which would involve noticing payments and additional charges. Another reason is of a fiscal nature. Buying a property and making it payable to your child means you would not have to pay taxes on the second home if the owner, your child, is not registered on a first home yet. The third reason is to avoid and prevent possible foreclosures by creditors.

How to buy a holiday home in the name of your children in Italy

When you buy a holiday home for your children in Italy, you are conducting a donation, which can take place in two different ways.

You can make a direct donation with a double visit to the notary. A transfer is made without specifying the reason, by registering the deed with the Revenue Agency. Your child will then use that money to buy the property. The advantage of this solution is that the donation is registered, with a tax dispute that could become more complicated.

If you want to avoid going to the Revenue Agency instead, you can make an indirect donation. The purpose of this transfer of money must be specified in the reason for the transfer. The second option is to make the transfer directly to the seller, asking him to put the property on the name of your child. The indirect donation is currently the most used, fast and economical. If it’s done correctly and traceable, there will be no problems from a tax point of view.

If all the steps aren’t carried out correctly, fiscal problems could arise with the so-called “profit meter”. The Revenue Agency asks for explanations to the taxpayer who is the owner of luxury goods – such as real estate – but who appears to have an income lower than that necessary to maintain them. It will therefore be necessary to demonstrate with all the documentation the correct passage of money certified by account statements or checks.

Maintain control of the holiday home

Sometimes it happens that parents want to keep a check on the vacation rental purchased for their children. Perhaps to prevent them from reselling it to obtain liquidity. To prevent such problems, it’s advisable to register a particular right, such as usufruct, or a share of co-ownership. This obviously entails additional security but also additional costs.

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