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Advice please, strange situation.
alm721
Posts: 728 Forumite
Ok firstly apologies if this is in the wrong place, I'm just after a bit of advice, its a bit of an odd situation.
Basically my hubby has taken over his fathers business as a sole trader. When he did so his dad owed the business about 40k (although it would have cost him about 75k had he closed the business due to redundancies and stock etc). Hubby has therefore taken on this debt and his father is taking a very large rent off him for using the shop. Hubby did not pay any good will towards the business. Anyway hubby has spoken to his dad to explain that after 2 years to trading and with things being as they are the business is not doing well. (Its not making enough to even pay him what he was being paid before when he worked for his dad. (The business was losing money then too but his dad was taking a lot out which wasn't really business stuff so we thought it should be ok).
Anyway he approached his dad about reducing the rent. His dad is not a very approachable man, is always convinced he is right and is very difficult to reason with. Hubby does not like to rock the boat and finds it very difficult to confront him. In the end hubby wrote him a long letter explaining all the problems etc and that dad wasn't really being fair in taking so much from the business whilst still owing it money etc.
His dad then came to talk to us and after telling us all the reasons why he disagreed then turned round and said he wouldn't reduce the rent but he would give hubby one of his rental properties. Totally out the blue, no explanation. Just said he would and then left.
We really couldn't make out what to think of it anyway he has now done this and has transfered this property as a deed of gift to hubby. We still cant work it out (although I think he has sadi something about being able to use it to raise money against to pay off the debt) but we do need some advice in terms of tax etc as I cant believe you can just give someone a house etc. The house is probably worth about 80k. It obviously is intended as payment in leiu of the debt owed to the business but how do we go about sorting this? We have around 20k in the business which we had to put in to pay off the overdraft when we took over and as we are now moving ourselfs it would be useful to get this money back out.
Therefore is it possible to raise money against the house to pay off some of the existing debt and how do we show this on the accounts?
Should there have been a valuation done for potential cgt ? Sorry for all the questions really a bit unsure of it all.
Thanks for any help anyone can give and sorry if this makes little sense, I've prob had slightly too much wine to be posting this!
Basically my hubby has taken over his fathers business as a sole trader. When he did so his dad owed the business about 40k (although it would have cost him about 75k had he closed the business due to redundancies and stock etc). Hubby has therefore taken on this debt and his father is taking a very large rent off him for using the shop. Hubby did not pay any good will towards the business. Anyway hubby has spoken to his dad to explain that after 2 years to trading and with things being as they are the business is not doing well. (Its not making enough to even pay him what he was being paid before when he worked for his dad. (The business was losing money then too but his dad was taking a lot out which wasn't really business stuff so we thought it should be ok).
Anyway he approached his dad about reducing the rent. His dad is not a very approachable man, is always convinced he is right and is very difficult to reason with. Hubby does not like to rock the boat and finds it very difficult to confront him. In the end hubby wrote him a long letter explaining all the problems etc and that dad wasn't really being fair in taking so much from the business whilst still owing it money etc.
His dad then came to talk to us and after telling us all the reasons why he disagreed then turned round and said he wouldn't reduce the rent but he would give hubby one of his rental properties. Totally out the blue, no explanation. Just said he would and then left.
We really couldn't make out what to think of it anyway he has now done this and has transfered this property as a deed of gift to hubby. We still cant work it out (although I think he has sadi something about being able to use it to raise money against to pay off the debt) but we do need some advice in terms of tax etc as I cant believe you can just give someone a house etc. The house is probably worth about 80k. It obviously is intended as payment in leiu of the debt owed to the business but how do we go about sorting this? We have around 20k in the business which we had to put in to pay off the overdraft when we took over and as we are now moving ourselfs it would be useful to get this money back out.
Therefore is it possible to raise money against the house to pay off some of the existing debt and how do we show this on the accounts?
Should there have been a valuation done for potential cgt ? Sorry for all the questions really a bit unsure of it all.
Thanks for any help anyone can give and sorry if this makes little sense, I've prob had slightly too much wine to be posting this!
0
Comments
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See an accountant!
Olias0 -
Thanks yes thats what I thought too! Is if defo an accountant
we need or a solicitor? Thanks0 -
If it were me I would see an accountant first to sort out the financial and tax issues and then if quiries came up regarding the legal ownership (either personal or business) of the property, then a solicitor.
I would think, however that if the transfer of this property was done through a solicitor, then any legal issues should have been addressed then.
One other thing, depending on your fathers age there could be an IHT issue if he dies within 7 years of gifting you this property.
Olias0
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