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Where Taxpayers and Advisers Meet

Tax advice - Need to keep property

Joined:Wed Apr 28, 2021 10:19 pm
Tax advice - Need to keep property

Postby WonderingLeaf » Wed Apr 28, 2021 10:24 pm

I am looking for some advice. I currently live in 3 bedroom semi-detached house. My Dad lives abroad. My sister is away at university and about to do a masters. For this reason it is only Mum and myself here most of the time.

My Mum is due to retire around Christmas. She finalised her divorce with my Dad whilst I was at university. I was not aware at the time that she had plans to sell our house. This never came to mind. She plans to use the funds to buy somewhere for her and boyfriend to live. I am keen on staying in this house and possibly having friends move in and pay rent to help keep the household going.

It is my intention to “buy” our house from her as the house it meets my needs and it not far from the station. I do not drive so this is quite important for me. Mum and I are not on the same page at all. She believes that I should find a small house or flat to move into. Regardless, I am keen to find a remain in our house.
I have around £90,000 in savings. My Dad owns a shop which he is currently in the process of selling to the current tenants. He will be giving me £50,000 to help. My Grandpa gives myself, my sister and our cousins a few thousand every so often. This is our inheritance being paid as a gift to avoid most of being swallowed by inheritance tax.

I was under the impression that Mum would be willing to sell the house to me at a fair price. Although it emerged in a conversation, we had over Easter that she wants to sell it for market value. She believes it is worth far more than I do. The house opposite sold for £221,000 in 2018. I was hoping to buy our house from her for around £200,000. A lot of work needs to be done, such as the back boiler needs replacing and the roof too.

I believe I may be around £80,000 short. I will probably need to look into getting a mortgage. However, I don’t believe I will be able to get one.

I currently work a few different jobs but am self-employed. I earn roughly £30,000 I have been meaning to get my tax situation sorted for a while but been reluctant to. Declaring everything will be a challenge and lead to me losing a chunk of my income – money I need to pay Mum off to keep our house. I am looking for additional income opportunities to help boost my earnings. Although the pandemic is not helping things.

Income Tax, National Insurance will eat up a lot of my income. Student Finance England will probably jump in to take their share too.
My Dad could potentially sell more assets in his country to help me. My Mum could perhaps allow me pay her £200,000 and then pay her the rest in time.

Is it in my interest to do a self-assessment and just take the hit? Apparently, you need 2 years of tax returns to be approved for a mortgage. Obviously, come Christmas I will not have these. I have the feeling I have been a little naïve up to now. Can I get a mortgage without my returns? My focus is to generate the funds needed to keep our house. I could take out a personal loan I believe?

Does anyone have any advice please?

Joined:Mon Mar 11, 2019 4:22 pm

Re: Tax advice - Need to keep property

Postby Jholm » Thu Apr 29, 2021 8:45 am

"Declaring everything will be a challenge and lead to me losing a chunk of my income" - the way I am reading this is that you have undisclosed income that you are avoiding paying tax on.

It is always in your interest to file a tax return and report your income. The longer you leave it, the more it will cost you in the long run by way of penalties and interest.

Tax... we all have to pay it.

Joined:Mon Feb 13, 2017 10:09 am

Re: Tax advice - Need to keep property

Postby someone » Thu Apr 29, 2021 11:08 am

It's hard to understand what you're saying but if you're saying that you're knowingly evading tax then that is a criminal offence.

In extremis that can result in a custodial sentence. But more commonly I believe that HMRC "merely" pursue penalties that I understand can be up to 100% of the tax owed (on top of having to pay the tax) and HMRC have at least 20 years to catch you.

I don't know for certain but I wouldn't be surprised that even if you did manage to buy your mum's house, HMRC could force you to sell it again to pay the tax you owe plus fines.

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