Hello.
If a relative loans another a sum of money to purchase a house:
(a) will any tax be payable on sale of the house, assuming the borrower has lived at the house for a period of years?
(b) will any tax be payable on rents from the house if said rents do NOT exceed the borrower's personal allowance?
(c) will any tax be payable on repayment of the loan?
(d) any other problems with this?
cheers,
cryptogram2006
In message , " snipped-for-privacy@hotmail.co.uk" writes
Not if it is the borrowers principal private residence (PPR). If it is the borrower's PPR for only part of the time and rented out for the rest then the gain is apportioned between the two periods, but an extra 3 years is apportioned to the period of PPR in any event. i.e. own it for
10 years, rent it out for 4 years, PPR for 6. taxable gain will be (4-3)/10 of the total gain. CGT allowance and taper relief will also reduce the gain.Only if the borrower has no other income. The interest the borrower pays can be offset against any rental income.
The lender will have to pay tax on that part of the repayment which is interest, but not on the bit that is capital repayment.
Yes, the borrower might not repay the loan, so I suggest the lender gets the borrower to give him a mortgage over the subject property.
Here we go confusing the punters again.
Are you sure it wont actually be confusing the puntee?
Yes.
Hang on, who is the punted? ;-)
rgds, Alan
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