No tax paid on rental !

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  • g373
    replied
    Should be able to resolve this using the Let Property Campaign (https://letproperty.campaign.gov.uk/). Speak to a knowledgeable accountant. Penalties may be around 10% (can be up to 35%) but may not be as bad as you think - especially if the rental income only did just cover the interest on the mortgage.

    What I am not sure about is how re-mortgaging a buy-to-let mortgage works from a tax perspective. Perhaps there is tax to pay on the money that wasn't "taken out" the property? I'm not sure.

    Also, now they are "aware" that they may have a tax bill to pay they must act or the penalties become much more severe.

    Leave a comment:


  • AndrewDod
    replied
    Originally posted by jpkeates View Post
    AndrewDod The loss to the daughter is the interest payments they then have to make for years to finance the money "given" to someone else.

    I agree that families have rules of their own and things can look odd from outside.
    Yes maybe a) if she paid it, and b) if that exceeded the value of the gift.

    Lots of rich kids (and their spouses) think they are under coercive control, when it's actually them being plain dumb. The drama with exclamation marks !, "millstones", coercive control etc....

    Why not just give the property back to dad and free yourself from the coercion (instead of trying to sell it).

    Leave a comment:


  • jpkeates
    replied
    AndrewDod The loss to the daughter is the interest payments they then have to make for years to finance the money "given" to someone else.

    I agree that families have rules of their own and things can look odd from outside.

    Leave a comment:


  • AndrewDod
    replied
    Maybe, but if cash was raised by remortgaging a property father has previously given to daughter - daughter has not really lost out in any global sense (apart from having the value of her prior gift lessened somewhat). She would not actually have paid anything directly.

    Yes the situation may be odd and irregular (maybe), but in a family sense it may be more of a case of a third party trying to induce a daughter to kick a gift-horse in the teeth.

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  • jpkeates
    replied
    Originally posted by AndrewDod View Post
    What money coerced from her father? What exactly has the daughter paid?
    Originally posted by roymck View Post
    her father never put his name to anything and when he wanted money he made her mortgage the property and she had to give him the money.
    But I agree there's a lot missing from the account.

    Leave a comment:


  • AndrewDod
    replied
    What money coerced from her father? What exactly has the daughter paid? Why exactly does daughter in law and son "now need to sell it" (a property they never bought in the first place)

    This story just doesn't make sense at all as a truthful whole. Expect meddling father in law is going to get his daughter in law disinherited, and probably also cause a divorce.

    It may be a tax fiddle, but nothing is telling me that in any definitive way so far.

    Leave a comment:


  • jpkeates
    replied
    Originally posted by roymck View Post
    This is difficult for me to ask a question on but advice will be needed . My son married a girl 2 years ago who owns a rental for the last 20 years or should I say it is in her name . Her father bought it for her and than later on took out a interest only mortgage on it ( Just sign this paperwork for me and don’t ask questions ) . She and my son now need to sell it and under stand that CGT will have to be paid . But she has been under her fathers coercive control for all this time and she has not paid or declared income for all of this time. As the income only just covered the interest only mortgage she was told she didn’t have to declare it, her father shouted her down if she questioned anything . It’s a millstone round her neck for many years and she wants to get out, her father never put his name to anything and when he wanted money he made her mortgage the property and she had to give him the money. In the early years when there was no mortgage the tenants paid her father cash.
    If the father has been receiving the rent, it's his income and his tax issue.
    Owning the property doesn't make your daughter in law a landlord automatically.
    Who's name is on the tenancy agreements and who receives the rent?

    Unless the property is in a very odd condition or in somewhere where property prices are massively depressed, it's hard to imagine rent that "just" covers the interest on a BTL mortgage.
    That doesn't sound right and sounds like the rent was being paid by the daughter in law.

    Now if she pays the CGT will it flag up that it’s been rented out as she never ever filled out a tax return. Is she better off coming clean to the tax people and trying to pay back all the tax she owes ?
    It might, but it may not.
    But it's best to assume that it will.

    Also a worry to us is that my son and her have just bought a house together so in years to come could the tax authorities come after her, could they make her sell there family home to pay off there debts ?
    Not directly (unless she is made bankrupt), but obviously if there were huge debts they'd need to be paid somehow.
    So selling the house might be the only practical solution.
    But how would the debts be so massive?
    How far back could they claim unpaid tax.
    Realistically, six tax years.
    There would be the tax, plus penalties and interest.
    Would they accept a deal if she comes clean or would they go straight into penalty and interest mode ?
    It depends, but there would probably be penalties and interest to pay.
    It wouldn't be fair if someone who didn't pay tax was in a better position than everyone who did what they were meant to.

    But the interest on the mortgage is deducted from the income before tax is calculated (until very recently) so there may not actually be much tax to pay.
    An accountant would be able to help - HMRC is running a program to allow landlords who haven't paid tax to own up and keep the downside to a minimum.

    As a comment on the whole situation (and I appreciate I am not in possession of all the facts), we're not taking about a "girl", she's owned a property for 20 years, so she must be at least 38.
    Her need to pay tax hasn't just occurred to her, and she could have been sorting her tax affairs for a long time.

    And she may have a case for recovering money coerced from her by her father.

    Leave a comment:


  • theartfullodger
    replied
    Clearly there are at least two people involved in Tax evasion. Hopefully HMRC will take action/ are already aware and are taking action. . Re. Coercive control she should get help from someone quick... e.g (there are other excellent charities)
    ​​​​​​https://www.womensaid.org.uk/informa...rcive-control/
    or
    https://www.nationaldahelpline.org.uk/
    - etc etc

    Were it me I'd grass the father up today, for both tax & coercive control.

    Best wishes to son & wife.

    Leave a comment:


  • AndrewDod
    replied
    Father coercively controlling his daughter by gifting her property and then helping her manage it??

    However it seems incredibly unlikely that over 20 years rental income would not have covered the mortgage interest. So the tax may be a massive issue, and it does seem there are problems.

    However, are you 100% sure that your newly married son (and perhaps yourself) are not the coercive parties here. Parents try to protect their (sometimes very vulnerable) children by giving them gifts sometimes, and feel a little threatened when the new spouse tries to lay claim on it (and then get divorced).

    Leave a comment:


  • roymck
    started a topic No tax paid on rental !

    No tax paid on rental !

    This is difficult for me to ask a question on but advice will be needed . My son married a girl 2 years ago who owns a rental for the last 20 years or should I say it is in her name . Her father bought it for her and than later on took out a interest only mortgage on it ( Just sign this paperwork for me and don’t ask questions ) . She and my son now need to sell it and under stand that CGT will have to be paid . But she has been under her fathers coercive control for all this time and she has not paid or declared income for all of this time. As the income only just covered the interest only mortgage she was told she didn’t have to declare it, her father shouted her down if she questioned anything . It’s a millstone round her neck for many years and she wants to get out, her father never put his name to anything and when he wanted money he made her mortgage the property and she had to give him the money. In the early years when there was no mortgage the tenants paid her father cash.
    Now if she pays the CGT will it flag up that it’s been rented out as she never ever filled out a tax return. Is she better off coming clean to the tax people and trying to pay back all the tax she owes ?
    Also a worry to us is that my son and her have just bought a house together so in years to come could the tax authorities come after her, could they make her sell there family home to pay off there debts ? How far back could they claim unpaid tax. Would they accept a deal if she comes clean or would they go straight into penalty and interest mode ?
    My son knew nothing of this when they married .
    Thanks

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