Wrong Mortgage on Let property - Scared !! Please advise!!

Terrified38

I have just found a valid EPC and have also read through alot of the links and sites you have all suggested.

I will contact HMRC about the returns. I have kept all receipts.

Ref the post from 'Trollfever'....the article doesn't read well, but I've kinda come to expect that now.

In this case, half the rent is yours (resident LL) the other half is his (non resident).

G_C - The partner currently has no input into/outtake from the property. The account is purely in joint names but I am dealing with all the finances (Brilliant job i'm doing :-( ). Will the tax regs still stand? Again I will disclose this to the HMRC and await the response.

Again thanks for all your input.

Terrified38

Sorry......G_M !!

Werdnal

Terrified38 wrote: »

G_C - The partner currently has no input into/outtake from the property. The account is purely in joint names but I am dealing with all the finances (Brilliant job i'm doing :-( ). Will the tax regs still stand? Again I will disclose this to the HMRC and await the response.

Again thanks for all your input.

I believe, and others may be along shortly to concur, that if the property is owned "jointly", ie in both you and your partner's names, then you jointly share the income/tax implications. Even if the other party is not actually taking anything from the account, the fact that both names appear on the property deeds, mortgage and account, makes you both liable. There is an option to "sign over" the tax liability to one or the other, but this has to be done formally and applied for. And I would think very carefully about this, as your business partner may not actively be taking money from the account at the moment, but if you take on the majority of the tax liabilty, then business partner suddenly comes back on the scene, whats to stop them withdrawing money from the account, after you have paid the lion's share of the tax on it?

Also, even if the rent only covers the mortgage, only the interest portion of the mortgage is deductable as an expense on your tax returns. So if for instance your rental income is £500/month, and mortgage is also £500/month - £400 repayment/£100 interest, then only the £100 is a deductable expense. It doesn't matter to HMRC what you are using the rental income to pay towards - to them it is income (same as your salary) and they tax it as such.

I pity you as it can be a minefield to sort out if it is not done correctly from the start. HMRC can are helpful, but not always sympathetic! You'll just have to ring and plead ignorance, but beware you are effectively dropping your business partner in it, as being a non-resident LL he also has to sort out his tax entitlement, and he has to nominate someone in the UK to pay his tax for him - thats likely to be you!

Kynthia

You are joint owners who aren't married. Therefore you can decide the division of profit and losses different to the share in the property. However I believe your tax liability must be the same as your division of profit and losses, so you can't split the income 50:50 but say differently on your tax return.

http://www.hmrc.gov.uk/manuals/pimmanual/pim1030.htm

There are people who inform the HMRC of property income even later than you, and you haven't been caught by them but are volunteering the information. Therefore they may be understanding. I don't know what they will make of your partner being abroad as this complicates the tax situation.

Terrified38

There are people who inform the HMRC of property income even later than you, and you haven't been caught by them but are volunteering the information. Therefore they may be understanding.

Kynthia - Thanks for the info. Puts a little bit of light into the situation. I am digging out all the info, receipts, etc ready and will update this thread when I have spoken to them.

I pity you as it can be a minefield to sort out if it is not done correctly from the start. HMRC can are helpful, but not always sympathetic!

Werdnal - I agree and I have read the earlier news link....they sound like a nice crew : ( As you say, I will be honest and take what's coming. Lesson to be learnt.

I did speak to the lender yesterday who are sending me some paperwork. They mentioned a change of address form and am aware that it is being let. They didn't mention back-pay or immediate repayment, but shalln't get my hopes up until I've read through it thoroughly. Again will update soon.

Werdnal

For info, just been reading another post here from someone in a similar situation:

http://www.landlordzone.co.uk/forums/showthread.php?46824-Letter-from-my-Mortgage-Lender

So far seems they have been hit with an Admin fee, which is probably what the lender would have charged for giving consent to let anyway, and awaiting the response. You might want to follow the link to keep up with how they get on too!

brit1234

Terrified38 just be honest to your lender. You are right to go to them straight away and clear this up. Well done, others would of hidden it, you are in danger of giving landlords a good name. Keep it up and I hope it works out for you.