Are your parents buying a property under your name (for investment purposes)? Or perhaps you’re one of the lucky ones whose parents are gifting you a property?
While either case is seen as a great thing as your family is well-to-do, it’s not all sunshine and roses.
There are some implications that you need to be aware of, including legal ones.
So here’s all you need to know if your parents are buying a property under your name!
TL;DR: Implications of Parents Buying a Property Under Your Name
- You Take Full Legal Ownership
- Higher Mortgage Payments, Property Taxes & Maintenance Fees
- Wait Out Period If You Want To Buy Public Housing
- Lower Government Payouts
- FAQ: Will I Be Considered a First-Timer If I Want To Buy an HDB BTO?
Disclaimer: For this article, we are assuming that you are above 21 years of age when your parents are purchasing the property under your name. If you are under 21 years old, your parents would be buying a property under trust, an article for another time!
You Take Full Legal Ownership
When your parents buy a property under your name, you will assume full legal ownership of the private property.
You are hence responsible for things such as mortgage payments, property tax, maintenance fees, and everything related to being a private property owner, even if your parents are forking out the money on your behalf.
Do note that if your parents have used your name for an investment property and you want to buy a second property to call your own, you will be hit with a hefty Additional Buyer’s Stamp Duty (ABSD). While the property is legally yours, you might want to discuss with your parents about what to do with it if you want to avoid ABSD.
Higher Mortgage Payments, Property Taxes & Maintenance Fees
Unless your parents are filthy rich and purchase a property for you upfront in cash, you will need to ensure that you, and/or your parents have sufficient funds to make mortgage payments.
As most of us know, these mortgage payments are going to be much higher than that of HDB flats. So while your parents may have the finances planned out when purchasing a property under your name, it is a good idea to double-confirm for yourself.
Even if you are gifted a property without a mortgage, you still have to deal with property taxes and maintenance fees.
As private properties have a higher Annual Value (AV) than public housing, be prepared to pay higher property taxes, depending on the AV of your property.
So make sure that you have a way to cover these recurring costs for the foreseeable future.
Wait Out Period If You Want To Buy Public Housing
Realised that you want to downgrade and buy an HDB flat? You’ll have to wait up to 30 months after selling the private property (or removing your name from the property) that your parents bought under you.
According to HDB, if you are:
- Buying a flat from HDB
- Buying a resale flat with CPF housing grant(s) or
- Applying for a housing loan from HDB
You will need to dispose of your private property and wait at least 30 months before your HDB Flat Eligibility (HFE) application.
If you are buying a non-subsidised resale flat (including Proximity Housing Grant), the wait time drops to 15 months.
Lower Government Payouts
Owning a private property is great, you get access to amenities if you live in a condo, or lots of space if you live in a landed property. But of course, the government takes it that you are well-off on your own and do not need much handouts.
You’ll be receiving lesser government payouts in the form of GST vouchers:
FAQ: Will I Be Considered a First-Timer If I Want To Buy an HDB BTO?
So long as you have not applied for a BTO or a resale with grants, you will be considered a First-timer. Your chances will not be affected if you have previously owned a private property.
Should I Be Concerned About My Parents Buying a Property Under My Name?
All in all, owning a private property, courtesy of your parents is great. However, you just need to make sure that your family has sufficient funds to cover recurring costs.
And should tragedy strike such as a loss of income from your parents or yourself, you’ll need to be able to afford the payments on your own or wait out 15 to 30 months to downgrade to public housing.
So be sure you and your family have enough emergency funds.