Remortgaging issue with pos solution but unsure...

Munki_2

Hi all,

My frist post in a long time... but I've got a situation that I would appreciate some advice on... Stick with me here.. it'll take a bit to explain...

My mortgage with C&G is coming to the end of its fixed term soon and my current situation has changed since I took out the mortgage to the extent I'm pretty sure I couldn't remortgage - I got a joint mortgage with my wife and she's since given up work and had a baby, so our total income has gone down quite a bit (plus the interest rates have gone up a couple of percent too!)

However, the good news is that my 235k house is about 120k equity. So if I sold, I'd have some money available to me.

As remortgaging on our current house is out of the question, possibly moving to a 'not so nice' area could mean we /might/ be able to afford a mortgage. However I'm not sure if I want us to do this, what with the property market at the moment.

Another option would be to sell up, bank the money in a high interest account and use the interest to help pay towards rental for a while... i.e. sit the market out a bit.

But possibly the best option available to us is this - My parents currently own a bungalow and a flat. The flat is occupied by my now-growing-old grandmother, who they want to get taken into care. Now my parents were thinking of selling this flat, buying a small home along with a buy-to-let mortgage and renting it out. However I told them this may not yield much return. Then soon after it came to me that they could buy my mortgage share of my house, own a %age share in my property and I could pay them 'rent', offering them an incentive to effectily split any profits on the rise of the property value and get more 'rent' money than they would have got renting out another property.

However, there is one issue I'm not sure about. If I did give them money each month, would they have to declare this to the tax man? My dad does not work any more and is claiming disability. My mum does not work. If I paid them £500 pcm (for example), would they have to declare this to the taxman? Or can I get away with giving it to them as a gift? Or is it simply unlikely that the taxman will pick up on £500 leaving my bank account and ending up in theirs? Would withdrawing it as cash and giving it to them to use for cash purchases help cover things up? Or have I simply got nthing to be worried about in the first place!?

So does the last idea seem a good one, and does it seem feasable?

So many questions... sorry!

Thanks in advance tho! :-)

Munki

lisyloo

If I paid them £500 pcm (for example), would they have to declare this to the taxman? Or can I get away with giving it to them as a gift? Or is it simply unlikely that the taxman will pick up on £500 leaving my bank account and ending up in theirs? Would withdrawing it as cash and giving it to them to use for cash purchases help cover things up? Or

Yes they would have to pay tax (minus expenses like maintenance).
No you won't be able to give it to them as a gift (legally).

If you try and cover things up then that is illegal.
You might get awat with it but the penalties are failry severe if you don't.

Munki_2

Aww.... spoil-sports ;-)

Although it's not actually rent. I'm just giving them money which I would have otherwise been paying on a mortgage. It helps them, saves them going through the hassle of finding a property and renting it, and besides, surely if I was paying it rent that would be like sub-letting it to myself(!?)

After all I don't have to give them anything. Although I would feel bad about living scott-free in a house I only half own. Thats why I would be giving them money. Not part of any proper rental agreement.

It's a strange situation really. What's the maximum you can gift someone in a year? Surely if anyone asks I can say we have agreed that I will live there free, but I am gifting them £500 a month - totally unrelated to the house?

Oh it's sooo confusing.

I don't want to do anything illegal. I would just like to know if there's a way I can wangle it so to avoid any unneccessary costs.

Cheers!