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Tax issues on property?

Property in child's name, what are the tax issues if parents pay and receive all monies?

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Hi, a friend is wanting to know what the legal implications are if a buy to let property is in their daughters name along with the mortgage, but they pay all the bills and receive all of the income. But the income is declared through the daughters tax return to take advantage of her personal allowance. I suspect this could be an issue with HMRC? Please can someone clarify?

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By David Ex
13th Jun 2021 10:01

If the property belongs to the daughter then the daughter declares the income in the absence of any more complex arrangements. It’s not a question of “to take advantage of her personal allowance”.

If the daughter has income low enough to be within the personal allowance, how did she manage to obtain a mortgage? That seems odd.

Unless you are qualified to advise your friend, I wouldn’t. You may end up with an ex-friend if it goes wrong.

Oh, and why have you posted anonymously?

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Replying to David Ex:
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By Dobbo86
13th Jun 2021 10:03

What about the fact that the parents receive the income that has been taxed against their daughter into their own personal bank account?

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By David Ex
13th Jun 2021 10:14

Quote:

What about the fact that the parents receive the income that has been taxed against their daughter into their own personal bank account?

What about it? If I pay my salary into a joint account with my wife, the salary is still taxed as my income not half as hers.

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Replying to David Ex:
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By Dobbo86
13th Jun 2021 10:21

Yes, but this is the parents bank account which the daughter does not have access to. It is the parents gaining an income that has been taxed at a lower rate. Is that not an issue?

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Replying to Dobbo86:
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By David Ex
13th Jun 2021 10:36

Quote:

Yes, but this is the parents bank account which the daughter does not have access to. It is the parents gaining an income that has been taxed at a lower rate. Is that not an issue?

If the property belongs to the daughter and the daughter pays tax on the income from the property, I don’t think it matters for income tax purposes if she chooses to give away that income. On the facts given, it is her income despite the fact that it never appears in her bank account.

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By Dobbo86
13th Jun 2021 10:42

Ok thanks. So as long as the parents declare the income on their tax returns that they "receive" from their daughter then it's ok? Sounds like they would be paying tax twice.

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Replying to Dobbo86:
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By jethro
13th Jun 2021 11:19

There is no income for the parents to declare. They are, however, effectively receiving gifts which might have IHT implications.

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JCACE
By jcace
13th Jun 2021 10:42

How old is the daughter? A minor cannot legally own land/property.

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Replying to jcace:
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By Leywood
13th Jun 2021 10:44

Quote:

A minor cannot legally own land/property.

Nor get a mortgage

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Replying to jcace:
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By Dobbo86
13th Jun 2021 10:45

28

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By Leywood
13th Jun 2021 10:42

Quote:

Hi, a friend is wanting to know what the legal implications are if a buy to let property is in their daughters name along with the mortgage, but they pay all the bills and receive all of the income. But the income is declared through the daughters tax return to take advantage of her personal allowance. I suspect this could be an issue with HMRC? Please can someone clarify?

You asked about legal implications. You need to ask a solicitor.

If you want Tax advice, you should ask a Tax advisor.

^^ Both of whom would need the full facts to be able to provide a full reponse.

Oops, I mean your 'friend'.

Whatever is said on here, if your 'friend' doesnt like the answer what will you do?

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Replying to Leywood:
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By Dobbo86
13th Jun 2021 11:06

Thanks,

Are they not likely to like the answer?...

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Replying to Dobbo86:
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By Leywood
13th Jun 2021 11:10

Who knows.

We havent got all the facts.

They (you?) need to speak to someone (a professional I mean) and provide full facts.

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By Tax Dragon
13th Jun 2021 11:51

How did the situation arise?

And what on earth are people doing trying to answer your question with no background information whatsoever?

Frankly, apart from "get advice", I suggest you ignore everything you've been told.

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Replying to Tax Dragon:
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By Hugo Fair
13th Jun 2021 13:05

Wholeheartedly agree ... but can't resist making a suggestion (whilst not providing any sort of answer):
* If the income derives from letting a property, then there must (surely) be a contract between tenant and landlord - including all aspects of payment terms (how much, when, to whom, etc); in which case I'd start there and forget all the other red herrings (in OP and several responses).

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By Paul Crowley
13th Jun 2021 15:10

And the next 'What if I..........' Question please?

Probably 'my daughter only has one property. Is it CGT tax free'

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By tom123
13th Jun 2021 20:46

Is the daughter fully aware of all this stuff?

It just seems too weird to alledgedly have a property, with income, but not receive said income.

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Replying to tom123:
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By Paul Crowley
13th Jun 2021 21:37

Agree
If she knows then she can make gifts out of income.
No complications needed

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Replying to Paul Crowley:
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By Dobbo86
13th Jun 2021 21:49

But she would have to declare the income to her parents as a gift on her tax return?

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By Tax Dragon
13th Jun 2021 22:10

Look at it in reverse. If the income is the daughter's, so too is the property. (And if the income is not the daughter's, why is she personally paying tax on it?)

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By Hugo Fair
13th Jun 2021 22:06

Aaargh! When they filmed those scenes of mental torture/brainwashing in the Ipcress File (or the Prisoner and others), the scriptwriters obviously felt that anyone being forced to read this thread wouldn't have passed the Board of Censors.

Every time another cryptic response (based on likely but guessed assumptions) is posted, it generates another misunderstanding from OP.

The only good thing about watching this slow motion car-crash is that we know the car with broken windows and bleeding occupant is sliding inexorably towards the piranha-infested river ... so it will end , but not prettily.

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Replying to Hugo Fair:
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By Tax Dragon
13th Jun 2021 22:09

OP actually PM'd me to explain. So, cryptic though it may be, my response is targeted.

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Replying to Tax Dragon:
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By Hugo Fair
14th Jun 2021 11:05

Good to know ... it is of course very kind of you to assist.
But it wasn't your response that triggered my anguish, it was the OP's post 10 mins before yours (13th Jun 2021 21:49) that acted as the straw breaking the camel's back on top of the accumulation of irrelevant/misunderstood earlier posts.
Anyway, 12 hours later, it's a glorious morning ... so I'll happily walk away from this thread with inner calm restored!

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