Parent to Daughter Funding For House Purchase

Parent to Daughter Funding For House Purchase

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I would welcome any input on the following scenario please.

Daughter will soon be starting a professional career with fast rising income. At present a student so no payslips etc so not easy to get a mortgage. The numbers strongly stack up in favour of purchase rather than rent and a 2 bedroom property is to be purchased with a view to the daughter taking a fellow professional under an excluded tenancy houseshare arrangement with the funds initially provided by the parents from their own offset mortgage facility and savings. The daughter should be able to get a mortgage within a few months of purchase in her own name on approx 50% of the property cost.

The current thoughts are that the property would be owned by the daughter -  capital gains are likely and the rental income could partly covered by rent a room relief.

The loan to the daughter would be protected by a legal agreement.

If necessary parents are prepared for no interest but would prefer to charge on  the interest that is charged to them on their offset mortgage. If the parents charge interest what is the tax implication - taxed as income but is there any way of deducting the interest they have paid  so that the result is nil. If the daughter pays interest to the parents can she pay gross or does she have to deduct tax? Can she deduct the interest paid from the rental income on the second bedroom if she doesn't use the rent a room relief?

Many thanks

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