M
MOH
Guest
A middle-aged couple I'm quite close (but not related) to are moving house. They've found the house they want but it's taking time to sell their current house, and they're worried about missing out on their target house.
I'd suggested some kind of bridging loan from their bank against their own house, but apart from the interest to be paid, (possible) due to their age there's a lot of paperwork involved, almost like getting a mortgage.
I may now be in a position to lend them what they need, but I want to make sure they're not hit with any tax liability.
- Should I draw up a formal loan agreement? Would I need a solicitor for this or is there a template on the web somewhere I could use?
- Do they need to declare this loan to the revenue, and how would they go about that?
- Can I make the loan interest free? I imagine the interest I'm not charging might be considered a gift, but since the loan will only be for a few months, that interest is unlikely to exceed the 3000 limit for the year, let alone the group C CAT threshold.
(I'm purely concerned about the tax issue here. They own their current house outright, and they won't have any additional mortgage for the new house. There's also no doubt their house will sell, and I know I'll be repaid).
I'd suggested some kind of bridging loan from their bank against their own house, but apart from the interest to be paid, (possible) due to their age there's a lot of paperwork involved, almost like getting a mortgage.
I may now be in a position to lend them what they need, but I want to make sure they're not hit with any tax liability.
- Should I draw up a formal loan agreement? Would I need a solicitor for this or is there a template on the web somewhere I could use?
- Do they need to declare this loan to the revenue, and how would they go about that?
- Can I make the loan interest free? I imagine the interest I'm not charging might be considered a gift, but since the loan will only be for a few months, that interest is unlikely to exceed the 3000 limit for the year, let alone the group C CAT threshold.
(I'm purely concerned about the tax issue here. They own their current house outright, and they won't have any additional mortgage for the new house. There's also no doubt their house will sell, and I know I'll be repaid).