BTL advice please

sb1987_2

Hi All,

This is my scenario. Me and my sisters have placed money together to put a deposit down on our first house. We couldn't get a mortgage in our names so we have done this through my father (house is in his name).

Deposit amount was: £65k.
My brothers money and I: £40k
Loan amount: £25k
House purchase price: £250k

My father is a homeowner and works full time.
He has a mortgage himself and earns around £45k per year.

For us to put down a deposit my father got a loan in his name.

The house is rented, generating a clear income of £1100. This is without the deduction of tax. The mortgage is currently interest only costing just shy of £700 a month.

This means we get about £400 a month clear from the house which is used towards the loan cost. My sisters and I are also paying £200 a month each into an account.

My sisters and I now want to pay £500 each per month (£1500 in total).

What would be the best way to pay this minimizing the amount we have to pay for tax? Can anyone offer any advise to make best of how we should handle this situation and advise if we choose to overpay?

We were thinking of overpaying £500 each to be used towards the loan. This will cut it down from 4 years to 1. But by doing so though we would not have a loan expenditure and so would we lose out by paying more tax?

Any advise would be greatly appreciated.

Thanks

Thrugelmir

sb1987 wrote: »

We were thinking of overpaying £500 each to be used towards the loan. This will cut it down from 4 years to 1. But by doing so though we would not have a loan expenditure and so would we lose out by paying more tax?

As the profit increases so will your fathers tax liability. Something you need to thing through. As may negate the value of the property as an investment.

dimbo61

Dad will get a TAX bill from the rental
You are trying to pay off the " Loan" WHY
Capital gains Tax and you might have problems/ IHT to pay if anything happens to Dad.