Hi all,
I am an additional rate tax payer and my spouse is an unemployed home maker. I am thinking of setting up an company/SPV to invest excess savings into a residential investment property, that I would ultimately like to gift to my children when they are 25ish (currently 9 & 7). I am flexible as to making myself, my wife or both of us as shareholders in the PropCo.
I intend to take out an interest-only mortgage and use the excess income from rent each month to pay down the mortgage, in effect treating it like a repayment mortgage. I don't intend to withdraw any excess income from the property or PropCo. Property price is approx. £350k, with mortgage payment of £750 and rental income of £1200-£1300. I also expect at some point after the first 5 years to convert to a normal repayment mortgage.
Therefore I would be grateful if anyone could provide an initial steer on what the tax treatment will be of the residual rental income used to pay down the loan?
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