Rental Income – Father & SonMake Text Bigger
I have a few queries I was hoping someone maybe able to help with.
I am 27 years old and currently looking to purchase a two/three bedroom house in London potentially with the mindset of renting out one or two of the other rooms, whilst also still living in the property myself. To do this, my dad was actually going to help me by either buying with me or gifting me some of the money to make this possible, i.e. circa £100k whilst I would put in a smaller deposit and then take a mortgage out of the rest. It seems due to his age (61) and lack of income (other than final salary pension) that we would struggle to get a joint mortgage, or at least a mortgage of 25 + years.
Therefore it seems that him gifting the money would be the most realistic solution (although I understand there maybe IHT issues if he dies within 7 years due to the gift being a PET. What I would like to know is if it is only me who takes out the mortgage – Can my father then receive any rental income on any rental profits that come in as a result of renting out two of the rooms or would it be me that would need to receive them due to taking out the mortgage (and therefore being listed on the deeds).
The alternate would be me to receive the rental income and then make payments to him – however I have concerns over HMRC might view this – i.e. Was this actually a loan arrangement and these are repayments, or alternatively am I allowed to gift back money, or would this be seen as gift with reservation – i.e. my father gave me the capital to purchase the property and then I am giving him back rental income which he benefits from.
Can anyone advise – or if they have any other bright ideas on my whole situation.
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