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Btl

noddynoo
Posts: 346 Forumite


What happens if you have a BTL mortgage but live in the property? And no one has ever paid you rent How does this work with tax? And the new rules. This is a random question as I don;t have a BTL but a friend does although she has lived there and now her daughter does so no rent
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Comments
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Technically you would have taxable losses to carry forward to future tax years. That could be offset against profits.
Is the lender aware that the property is let to a family member?
When you say no rent. Does any money change hands?0 -
If there has never been an income (rent) then there is no letting business and no tax.
If it is just a temporary situation then as above there may be a loss to report and carry forward.
In either case there is probably a breach of mortgage conditions and the lender would not be best pleased if they found out.0 -
I think her daughter may pay her a bit I was not really able to tell her much as I don;t know. She has had the place 10 years and lived i it initially for 3 yrs and daughter for 7 I think. It was never intended to be let out but they had another house and couldn't get a residential mortgage It was me who mentioned new rules they had no idea0
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By no rent I meant no letting agent etc sorry0
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if you never received any rent then you never commenced a letting business so have no tax losses to claim
"Where the rental business is letting property, the business can’t begin until the first property is let."
https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim2505
merely have a BTL mortgage does not make it a letting business
the fact you have never had a paying tenant is also likely to seriously upset your mortgage lender as it would look like you obtained the mortgage under false pretenses since it evaded you having to pass the normal affordability checks for a residential mortgage
even if you can convince the lender that you genuinely intended to start a letting business, the moment you take in family as the tenant it becomes a Regulated BTL which again is a very specific type of mortgage which lenders expect to know about upfront, not find out about later
as to your question "what happens" it rather depends on how successful you are continuing masking what you are doing and who will inform on you?0 -
Its not me! I rent don't own anything. The person in question is a lot older than me and her daughter I know. I was just chatting to them0
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I think her daughter may pay her a bit I was not really able to tell her much as I don;t know. She has had the place 10 years and lived i it initially for 3 yrs and daughter for 7 I think. It was never intended to be let out but they had another house and couldn't get a residential mortgage It was me who mentioned new rules they had no idea
so far they have got away with it for 10 years. Why do you now think they will be caught? Morally they should be, but realistically will they? If their lender does catch them who knows what the lener's attitude would be, obviously the worst is to call in the loan and force a sale or they may just let them carry on making payment at the same or higher rate
not sure what "new rules" you are thinking of. Mortgage fraud has always been fraud
payment by the daughter to her parents will not make it a letting business on which they can add tax evasion to their history0 -
I was chatting to them about buying in general and mainly about how I can;t! They told me about the BTL and I was just saying there are new tax rules etc mainly things I had read about here From what I could gather they took out the mortgage initially as it was near the mothers work but she retired after that and her daughter moved in and pays a bit. I was thinking like you it sounded a bit risky but they didn;t seem t think so0
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I was thinking like you it sounded a bit risky but they didn;t seem t think so
forget their ideas, you cannot finance purchase of a property you intend to live in by taking a BTL mortgage in the current world0
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