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Where Taxpayers and Advisers Meet

Apartment hotel investment income paid back to father

Posts: 2
Joined: Wed Aug 13, 2014 12:26 pm

Apartment hotel investment income paid back to father

Postby plastics77 » Mon Dec 24, 2018 10:54 pm

Hello there, wondering whether I need to include this in a Tax return and if so, under which parts of the Property section.

My father bought an 'apartment hotel suite' investment in my name with part of his capital lump sum pension fund after taking retirement. This is a commercial property therefore subject to VAT returns etc. and I receive 'quarterly income' for the unit based on occupancy of the hotel room over each 3 month period. The arrangement is that all the income I receive from this investment is transferred directly to my father each quarter effectively to pay back the 'capital' he put in, without interest.

So I gain no income until this capital is repaid, and he gets his pension capital back over a longer period in quarterly transfers from my account. I cannot see how either of us have any income tax liability with this arrangement currently (IHT possibly, and a separate issue) - for the purposes of the income tax return, is it sufficient to put a comment to this effect in the 'property additional comments' section, or do I need to submit this info in another way?

Many thanks for any advice!

Posts: 768
Joined: Fri May 16, 2014 3:47 pm

Re: Apartment hotel investment income paid back to father

Postby AGoodman » Wed Jan 02, 2019 2:22 pm

Somebody is receiving the income and it sounds like you.

Overall, it sounds like your father has lent you the money to acquire the investment without interest and you are repaying him.

You would not get any tax relief for repaying the capital so I can't see the payments you make him being deductible for tax. You will therefore have an income tax liability on the income you receive.

The exact nature of the income depends on the nature of the investment. I don't know but suspect it may only be property income if you actually have an interest in the property. It may be trading income of some other kind.

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