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Post Info TOPIC: Property Tax Query
Andy550


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Property Tax Query
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Hi all,

My friend owns two properties, one of which is buy-to-let. He is intending on buying another property on behalf of his cousin as a favour as his cousin can't get a mortgage. Therefore the mortgage will just be paid off by his cousin and no "real" rent will be charged. I can't get my head around what he would submit in his tax return. Would he omit it altogether as it has not been purchased for buy to let purposes or would he include it and charge a notional "fair value" rent?

Any suggestions would be appreciated.

Thanks,

Andy.

 



-- Edited by Andy550 on Tuesday 13th of August 2013 11:57:08 AM

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RuthA


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Yes it needs to be included with actual figures used as with any other property. Your friend will be liable for any capital gains tax that arises in the future as it is not his residence. I don't know if there might be alternative options such as setting up a trust or joint ownership, so it might be worth exploring that and also considering legal advice regarding a contract between them as your friend could end up in a financial mess if his cousin should, say, find himself out of work and unable to pay the rent.

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Ruth (AFA, ACIB)

Shore Accounting
www.shoreaccounting.co.uk
Andy550


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Thanks very much for your advice Ruth, that's very helpful.

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