Dependent Relative Mortgage and Income Tax

[MaryA144]

I am in the process of purchasing a flat for my daughter to move into using my own savings, supplemented by a Dependent Relative Mortgage. My daughter will not pay rent but will make the monthly mortgage payments. My question is, will I have to enter these payments as rental income on my tax return? The mortgage will be paid from my bank account and my daughter will transfer the monthly payments to my bank account to meet these payments.

I have seen various posts on a number of forums, some say the second property is viewed as a private residence (second home) as it's being used by a relative. Others that you have to treat the payments as rental income even though they are going towards paying off the mortgage essentially treating it as a BTL for tax purposes.

Any help greatly appreciated.

[Peter D]

I assume the Dependant Relative Mortgage is a residential mortgage. Why is your daughter a dependant relative. As the property appear to be in your name then you will have a CGT liability on a disposal in the future. It will also form part of your estate for IHT purposes. If your daughter is paying the mortgage although it being via your account. why is the property not in her name with you as the guarantor so there would be no IHT or CGT issues. Regards Peter