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Rental Property
regulator_2
Posts: 99 Forumite
Hi,
I've just purchased a new build flat with a 250 year lease on and it will be ready in 2016. My parents will provide me with enough of a deposit to qualify for the mortgage (around £90,000). I'm looking to get married in the next few years and will eventually move in to the property however In the mean time I want to rent the flat out. My parents would like to protect their deposit and so, if anything were to happen in my marriage their deposit would be protected. I currently live in my parents home and don't own any other house.
My question is how can this be arranged so that my parents can protect their money whilst also being tax efficient? I've done some reading on a Deed of Trust but according to the solicitor this would not protect my parents deposit.
I've done some reading on a Tenants in Common arrangement but, would this would trigger a CGT charge on the gain for myself and my parents when I come to sell the flat? As I understand it I wouldn't pay CGT for the periods of actual occupation by myself and may also get some letting relief. To reduce this would I be able to elect this as my Principle Private Residence as I don't own another home? I understand that I would pay Income Tax on the rental income less expenses.
Sorry for all the information but I've got lots of thoughts going on in my head and just want to secure my parents and their money.
Many Thanks in advance for all your help.
I've just purchased a new build flat with a 250 year lease on and it will be ready in 2016. My parents will provide me with enough of a deposit to qualify for the mortgage (around £90,000). I'm looking to get married in the next few years and will eventually move in to the property however In the mean time I want to rent the flat out. My parents would like to protect their deposit and so, if anything were to happen in my marriage their deposit would be protected. I currently live in my parents home and don't own any other house.
My question is how can this be arranged so that my parents can protect their money whilst also being tax efficient? I've done some reading on a Deed of Trust but according to the solicitor this would not protect my parents deposit.
I've done some reading on a Tenants in Common arrangement but, would this would trigger a CGT charge on the gain for myself and my parents when I come to sell the flat? As I understand it I wouldn't pay CGT for the periods of actual occupation by myself and may also get some letting relief. To reduce this would I be able to elect this as my Principle Private Residence as I don't own another home? I understand that I would pay Income Tax on the rental income less expenses.
Sorry for all the information but I've got lots of thoughts going on in my head and just want to secure my parents and their money.
Many Thanks in advance for all your help.
0
Comments
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Your bigger problem may be obtaining a mortgage, it's going to be hard for you to find a lender who is happy that your deposit is also a loan from your parents
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You will also need a buy to let mortgage, which will be difficult if you do not have a property of your own.0
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If you are planning to let the property out you will need a BTL mortgage. It is possible to use a borrowed deposit for a BTL mortgage and a mortgage broker will be able to explain your options to you.
The bigger problem will come when you want to live in the property and will then need a residential mortgage. Most, if not all lenders will have a problem with a borrowed deposit.
Lastly, if you are letting out the property you cannot nominate it to be your primary residence as it will be the residence of the tenants not you. The fact that you don't own another property has no bearing on this.0 -
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