The plan is to grant her an casual 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 possess a mortgage approved on a new flat costing £200000. At the same time, and my wife and I are lucky to possess equity available in our family home. I am earning a splendid salary and my bank has indicated that it would approve a remortgage of £200000 at a discounted rate.
[br]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 casual 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, and they would push me into the higher rate tax bracket and possibly gain the plan unviable. SP Continue reading...
Source: theguardian.com