Property News · December 17, 2015

I want to remortgage the family home to buy my daughter a flat – my worry is tax


The plan is to grant her an informal mortgage, which she could pay directly to the bank, but would her repayments be considered taxable rental income for me?Q My daughter is struggling to have a mortgage approved on a new flat costing £200,000. At the same time, my wife and I are lucky to have equity available in our family home. I am earning a good salary and my bank has indicated that it would approve a remortgage of £200,000 at a discounted rate. The solution seems simple: my wife and I could remortgage the family home, buy the flat that my daughter is interested in, grant her an informal mortgage and allow her to live in the flat rent-free. She can pay off the mortgage directly to the bank – when the balance is zero we would transfer the ownership of the house to her. My only concern is tax. Would the interest and capital repayments she makes directly to the bank be considered taxable rental income for us? If so, they would push me into the higher rate tax bracket and maybe make the plan unviable. SP Continue reading…

Source : theguardian.com
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