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Renting to Parents & Tax
Comments
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FredDogsMum wrote: »Red - I hear and respect what you are saying and agree. In a different place this may have been a consideration but without going into too much personal detail in their circumstances a lot of what you have said does not apply. So this truly is the best option for them.
I doubt it, but it seems that its what you want to do.
I wish them good luck and hope it works out for them.0 -
So - its all just to dodge tax. The tax you'd pay on the rent income would be less than paying the whole thing (which you say you could afford).
No its not a tax dodge. We would never knowingly do anything that was not legal.
Yes we could afford to pay it if we had to but why should we. We have my own retirement to save for.
I came on to this forum to explore if the advice we have been given and our thoughts and ideas were the best way to go about this. I was hoping that the wise people on here would point us in the right direction if they could think of a better way by using the tax system to our best advantage as there may come a time in the future when one of them won't be paying enough to cover the outgoings for the property. Surely that is what these boards are for.So you're contemplating mortgage fraud as well as tax evasion.
Not only do you need a BTL mortgage, as you're renting to a family member it will need to be a regulated BTL which will cut the pool of lenders even further and come with even tighter restrictions than a normal BTL mortgage.
We are certainly not contemplating mortgage fraud or tax evasion. Why would we.
If there is something in what I have said that makes you think that we would be committing these why could you not just suggest I look at what we are doing more carefully as to the best of your knowledge that would be the case.
I thought this forum was about helping people not assuming the worst of them and accusing them of attempting to break the law.
If we just wanted to make money sod it leave the parents in SH where they are, buy a house, rent it out for market value, pay the tax and make money.0 -
I'm not gonna read through this thread to check if the mortgage has been spelled out to you
you state you will be buying on a "second home" mortgage.
Typically (I have not read your policy so cannot know the following applies to you) a second home mortgage terms and condition expressly preclude letting the property to family who will use it as their (not your) main home.
in a nutshell, you cannot buy a property, get rent from it, and expect to do so on a residential mortgage - "second home" or not, as it is not going to be used by you as a home at all.
it is not a question of whether you can afford a second mortgage, it is a question of whether the lender will allow such usage in the first place0 -
I'm not gonna read through this thread to check if the mortgage has been spelled out to you
you state you will be buying on a "second home" mortgage.
Typically (I have not read your policy so cannot know the following applies to you) a second home mortgage terms and condition expressly preclude letting the property to family who will use it as their (not your) main home.
in a nutshell, you cannot buy a property, get rent from it, and expect to do so on a residential mortgage - "second home" or not, as it is not going to be used by you as a home at all.
Thank you - This is just the sort of advice I was looking for. I will speak to our mortgage consultant again and make sure that we are not doing anything that the mortgage company is not aware of.0 -
Then you won't be due to pay income tax anyway. It's only payable on your profit.FredDogsMum wrote: »there may come a time in the future when one of them won't be paying enough to cover the outgoings for the property.0 -
Then you won't be due to pay income tax anyway. It's only payable on your profit.
I understand that but HMRC are not going to let me carry those losses backwards against earlier profits are they and I am unlikely to rent this property out after they no longer need it. So no opportunity to carry them forward either.0 -
Did you ever get this resolved? I am in a very similar position and am a bit lost!0
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Probably best to start your own thread. Op havent been active since april 2019Familyman01 said:Did you ever get this resolved? I am in a very similar position and am a bit lost!0
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