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Original poster

Tax avoidance? Parent buying house for child on loan.

454 replies

emmalinewre · 15/12/2024 08:48

Hi!
A few year ago my dad gave me and my sibling £200k each to buy a house each - on the condition that we sign a contract with him paying him back £600 per month on an ongoing basis.
Friends at the time were pleased for us, we're very lucky to be on the propery ladder - I appreciate all that.
However, it has become rather a burden as that is a lot of money a month to find, and I suspect this is some sort of way my dad can avoid tax - as he refers to these monthly payments he gets from us as his 'income.'
He also has around ten different savings accounts, some in the UAE, which seems a bit shifty.
Can anyone with knowledge of tax/similar advise as to how he may be benefitting from this arrangement?
My sibling thinks its all great and he's just a wonderful parent, but myself and husband feel rather locked in and controlled financially by the situation - and with no way out as its not as if we can buy out of it.

Thanks!

OP posts:
Anothernamechane · 15/12/2024 09:41

SheilaFentiman · 15/12/2024 09:38

Mmmm… but you aren’t the boss of me. Unless you are a 50 something guy with a nice line in waistcoats? In which case: Hi Dave, can you sign the document I sent last week? Thanks everso.

I can choose whether I respond to you, you can choose whether you respond to me. Isn’t free speech grand?

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You are both being ridiculous and derailing the thread.

SheilaFentiman · 15/12/2024 09:42

gamerchick · 15/12/2024 09:40

Seriously dude, going back to bed for an hour can put you in a much better mood.

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Awww, thanks for the advice. Unsolicited - my favourite flavour!

PaleAzureofSummer · 15/12/2024 09:48

However, it has become rather a burden as that is a lot of money a month to find
Surely you'd have been paying rent or a mortgage if it weren't for that?

BlueSilverCats · 15/12/2024 09:54

Sell the house and pay him back. Of course , then you'd have to pay mortgage/rent rather than your" dodgy ,awful, controlling,tax avoiding" dad.

Even if people did tell you something was wrong what would you do with that information ? Dob him in or try and blackmail him into dropping the loan expectations?

gamerchick · 15/12/2024 10:03

SheilaFentiman · 15/12/2024 09:42

Awww, thanks for the advice. Unsolicited - my favourite flavour!

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Really hope your day gets better.

Femme2804 · 15/12/2024 10:08

You and i in the same situation. My MIL gave us 100k for downpayment to buy a house but we need to pay her back £500 every month. I just glad to be honest. Rather than all mortgage. I would do the same for my kids. Its not tax avoidance. Its really hard to buy property these days without help. I dont see its a burden. Imagine if you have to owe bank with interest. I really dont understand your point of view

RB68 · 15/12/2024 10:10

As a loan it is still seen as an asset of the estate should he die.

Nolegusta · 15/12/2024 10:12

Anothernamechane · 15/12/2024 09:41

You are both being ridiculous and derailing the thread.

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I said 'moving on' twice, and am no longer responding. 👍

muggart · 15/12/2024 10:16

OP you do know that tax avoidance isn't illegal anyway right? there's nothing wrong with legally finding ways to reduce taxes. It happens all the time e.g. company owners getting paid dividends not salaries, people putting money into ISAs etc. So even if it is a mutually beneficial arrangement rather than simply something that benefits you why does that matter?

saveforthat · 15/12/2024 10:19

Anothernamechane · 15/12/2024 09:41

You are both being ridiculous and derailing the thread.

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Yes they are and I really hate people who have to have the last word. It's childish.

Oldandcobwebby · 15/12/2024 10:25

Surely, what you meant to write was:

"I''m so fortunate to have such an amazing dad. He has enabled me to have a big interest free loan very cheaply. My housing is all sorted and I'm not throwing money away in rent. He's got lots of money tucked away so I will probably end up with a huge inheritance too. I wish everyone was as lucky as me!"

Sorted

Original poster
emmalinewre · 15/12/2024 10:25

NoWordForFluffy · 15/12/2024 08:57

How is £600 a burden when you also have a DH? That's bloody cheap for a mortgage or rent these days. If you weren't in that house paying £600, where would you be living and how much would it be costing you?

Yeah, we have a mortgage as well.

OP posts:
Original poster
emmalinewre · 15/12/2024 10:26

SheilaFentiman · 15/12/2024 09:02

What outcome are you looking for? You mention his accounts in the UAE being dodgy, but it doesn’t sound like you are concerned that you were loaned “illegitimate” money in any way. You just don’t want to repay it…?

Do you have a mortgage as well as the loan?

Yes, we have a mortgage too

OP posts:
LittleBearPad · 15/12/2024 10:27

emmalinewre · 15/12/2024 10:25

Yeah, we have a mortgage as well.

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Borrow whatever you owe your father from your bank and pay him back.

Original poster
emmalinewre · 15/12/2024 10:27

twobluehorses · 15/12/2024 09:03

It’s going to take you almost 30 years to pay him back. He’s done you an absolutely enormous favour and you’re ridiculously ungrateful

I've already mentioned I'm grateful. But we do have a mortgage as well, and he's known to be a bit dodgy. I was asking a genuine question.

OP posts:
Nolegusta · 15/12/2024 10:27

saveforthat · 15/12/2024 10:19

Yes they are and I really hate people who have to have the last word. It's childish.

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Which is why I said 'moving on' to pp. I haven't continued the derailing, which I openly admit to having started. Several other posters are now attempting to continue it, including you. A tad ironic really.

Original poster
emmalinewre · 15/12/2024 10:28

Christmaseason · 15/12/2024 09:08

Sell your house and pay him back if it’s too much of a burden for you. Then pay a more expensive burden of thousand or whatever to a bank every month for a mortgage.

He won't let us. Its in the contract we can't do that. We also have a mortgage.

OP posts:
LittleBearPad · 15/12/2024 10:28

emmalinewre · 15/12/2024 10:27

I've already mentioned I'm grateful. But we do have a mortgage as well, and he's known to be a bit dodgy. I was asking a genuine question.

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You aren’t responsible for his tax affairs.

Original poster
emmalinewre · 15/12/2024 10:29

Startinganew32 · 15/12/2024 09:20

Wtf you feel locked in because you didn’t get your house for free? Well sell it then and get a mortgage with 5% interest which will probably be more than 600 per month in repayments.

No he’s not profiting and you sound extremely ungrateful.

We already have a mortgage on the house aswell and it says in his contract we can't sell and pay him back - he wants the money each month.

OP posts:
Caterina99 · 15/12/2024 10:30

your mortgage would likely be more than £600 higher if you included that £200k

But presumably you could remortgage for the extra amount and pay your dad back his money?

If it’s a loan it’s not really tax avoidance/evasion of any kind. And it’s impossible to say whether his foreign bank accounts make his tax affairs dodgy

Original poster
emmalinewre · 15/12/2024 10:31

Oldandcobwebby · 15/12/2024 10:25

Surely, what you meant to write was:

"I''m so fortunate to have such an amazing dad. He has enabled me to have a big interest free loan very cheaply. My housing is all sorted and I'm not throwing money away in rent. He's got lots of money tucked away so I will probably end up with a huge inheritance too. I wish everyone was as lucky as me!"

Sorted

We already have a mortgage on the house aswell and it says in his contract we can't sell and pay him back - he wants the money each month. I won't be getting any inheritance. I saw a solicitor at the beginning of all this and they said it all looked really suspicious but I couldn't afford to engage them to look into it.

OP posts:
LittleBearPad · 15/12/2024 10:31

emmalinewre · 15/12/2024 10:28

He won't let us. Its in the contract we can't do that. We also have a mortgage.

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Who drew up the contract and was it seen by a lawyer?

Does your lender know about the loan as your father may have a charge over your house.

Original poster
emmalinewre · 15/12/2024 10:31

PaleAzureofSummer · 15/12/2024 09:48

However, it has become rather a burden as that is a lot of money a month to find
Surely you'd have been paying rent or a mortgage if it weren't for that?

We have a mortgage on the house as well

OP posts:
Nolegusta · 15/12/2024 10:32

emmalinewre · 15/12/2024 10:28

He won't let us. Its in the contract we can't do that. We also have a mortgage.

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It's wriiten into the contract that you cannot pay early? Is there an early payment fee?

WinterBird24 · 15/12/2024 10:32

emmalinewre · 15/12/2024 10:26

Yes, we have a mortgage too

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Well then it’s your fault for borrowing beyond your means.

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