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Ask An Expert: Tax Implications?

Q.  Hello, I’ve got an interesting question. I currently owe approx £100,000 on my mortgage of the flat I live in. But the wife and I are looking to move into a house in a different area and let out this flat. Now then, my mum has agreed to lend me £100,000 to pay off my mortgage on the condition that I pay her back when I sell the flat, which I don’t want to do now, I would prefer to rent it out as it’s in a good rental area. My concern is the tax implications?

So I have a few options. 1. I pay off the mortgage of my flat and collect rent for a few years, then sell it and give my mum back her £100,000 (plus a bit extra) 2. I change the flat mortgage to a Buy-to-let and pay £100,000 towards the deposit (+£35,000 my own cash) towards the new house, which will probably cost around £200,000. 3. My mum buys the flat off me, I collect the rent then or she collects the rent? Then when she sells it she takes her £100,000 and gives the rest to me. Another thing to consider is I’ve just been made redundant but my wife has a secure full time job. Any help or pointers in the right direction to get some advice wuold be very much appreciated. Thanks very much in advance.

A. Thanks for your query. It’s a good question and difficult to know the best tax treatment. We would advise that you consult a qualified accountant for this and can refer you to several good firms. Just give us a call on 020 7519 4900 and we would be happy to assist.

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This entry was posted on Friday, July 24th, 2009 at 2:27 pm and is filed under Ask An Expert. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.



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