7:09 AM, 23rd April 2021, About 2 months ago 6
Is it illegal to deduct mortgage interest on someone else’s mortgage, or have I been badly advised? An experienced and mature tax adviser suggested that my unmarried partner should gift me 1% ownership of her HMO into a bare trust, in order that I may legitimately deduct all the interest on the HMO’s mortgage with no SDLT on the 1% gift.
We jointly run a small portfolio, with some houses owned in her name and others jointly. The HMO was bought in her name only, and remains solely in her name at the Land Registry; the HMO mortgage is solely in her name too. All the HMO’s revenue accrues to me.
I was advised that the 1% bare trust gave me the basis for deducting 100% of the mortgage interest.
Is this legit? Aggressive tax tactics are not our style, but our adviser assured us it was an established move. We’ve done it for 5+ years. I worry that HMRC might disagree. If they did, presumably the penalty rises as time goes by.
I’d be grateful if any suitably qualified readers on here would give their view. If it’s not legit, what next?
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