Mortgage worry Rental income not declared correctlyfor this y

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    Mortgage worry Rental income not declared correctlyfor this y

    Ive just got a DIP done for a btl mortgage and am ready to go to full application, however I’m worried that my acccountant has not allocated the rental income correctly.

    I am self employed and do a tax return, my wife is employed and has never done one. We own one btl property jointly (joint tenants) for 2.5 years and one in my sole name. Reading up, it looks like my wife and I should have split the rental income equally on the jointly owned property but I’ve claimed it and payed tax on it. I can’t remember ever signing a form 17 or setting up a declaration of trust for me to have the rental income solely, we do everything financially together and my wife is not concerned how the income is split, we are both lower rate tax payers.

    im using a lender that has no minimum requirement, the dip went through no problem, my question is will the fact that my wife’s owns the property jointly but hasn’t declared the income cause the mortgage to be declined. How closely are the lender likely to look at this, obviously from now on i’ll Do two tax returns, my accountant should have done it correctly as he knew that the property was jointly owned because they did an accountants certificate for the mortgage.

    ive already done my tax return for 2017/18, worst case if it is rejected could I do a return for my wife 2017/18, (still got until 31st Jan 19) and ask the acccount to ammend mine to show half the income even though I’ve made a payment last week.

    thanks in advance.

    #2
    Be fully honest to lender and request wife contacts HMRC URGENTLY as she's probably liable for fines etc.

    But less tax overall?

    How odd accountant allocated all to you off his own bat
    I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

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      #3
      Thanks for the reply, yes I do need to get it resolved, my accountant who did this has retired so need to get the new firm to resolve. No one enjoys doing tax returns so at the time never questioned it, however now that I want this mortgage it could cause me an issue. I’ll just have to wait to see if the application gets rejected.

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        #4
        I do not think you have any major concerns so far as the lender is concerned and I feel that properly explained to HMRC they will be understanding given that you have taken the rental as being 100% and have paid tax accordingly rather than the 50/50 apportionment.
        As long as you can produce your Self Assessments, the corresponding Tax Calculations and Tax Overviews, the lender will see that the income from Land & Property have been fully declared notwithstanding the fact that the accountant may have made an error in the submission.

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          #5
          loanarranger,

          Thanks for your advice, it’s much appreciated. Yes, no problem with the tax documents, all paid and correct. We are both basic rate tax payers so HMRC have not lost any tax just not split correctly. I was just worried the lender might take a dim view of not reporting the rental income correctly, everything else is good.

          Comment


            #6
            Glover1862 , Lenders take a dim view when the applicant has indeed failed to disclose such income , ignorance is not an excuse and considered as being fraudulent in its truest meaning.

            best wishes going forward.

            Comment

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