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Father as tenant - tax advice?
threaderswithit
Posts: 8 Forumite
Hi,
We are looking at moving my father in as a tenant to our rental property, are there any tax implications that we should be aware of?
We are looking at moving my father in as a tenant to our rental property, are there any tax implications that we should be aware of?
0
Comments
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Will he be claiming LHA?0
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Be careful of charging very low rent as HMRC may "deem" you to be receiving market rentPaying down the mortgage:
At 1 October 2011: £226,000
Currently: £224,499
Aim: 85% LTV (£212,500)
Paid £1,500
Target remaining: 88.89%0 -
Not a tax issue, but be careful your father doesn't expect to be accruing a share in the ownership of the house, unless you have agreed this of course! Best to have a standard written tenancy agreement in place, even if this feels a bit odd with family.
There may also be inheritance tax issues if you bought the property with money your father gave you.0 -
Nothing special - you'll still have to pay tax on the rental income you receive, just the same as if the tenant were unrelated to you.threaderswithit wrote: »Hi,
We are looking at moving my father in as a tenant to our rental property, are there any tax implications that we should be aware of?"Now to trolling as a concept. .... Personally, I've always found it a little sad that people choose to spend such a large proportion of their lives in this way but they do, and we have to deal with it." - MSE Forum Manager 6th July 20100 -
Thanks everyone, he is not claiming any benefits and we are not giving him a portion of the house, he is purely going to rent for a reasonable amount i.e. not much below what we would get in the open market place. Many thanks.0
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Be careful of charging very low rent as HMRC may "deem" you to be receiving market rent
not sure on this but would have thought that the taxation burden would actually fall on the father, as it would be the father who would be deemed to have received the benefit equivalent to the difference between market rate rent and what was paid.
that's usually how it works for tax purposes when you get the benefit of something that you don't own for a reduced (or zero) price.0 -
That is correct, but that is the case for employees normally.
Peppercorn rent will cause HMRC to investigate and the OP will have to deem the rent to be market value and therefore pay tax on this amount, not the amount received.Paying down the mortgage:
At 1 October 2011: £226,000
Currently: £224,499
Aim: 85% LTV (£212,500)
Paid £1,500
Target remaining: 88.89%0 -
Not sure I agree with everything posted. You could, if you were so minded, buy a property for your father to live in and not charge any rent. You wouldn't be taxed on the market rent that you could have received if you'd let the property on the open market.I'm a Forum Ambassador on the housing, mortgages & student money saving boards. I volunteer to help get your forum questions answered and keep the forum running smoothly. Forum Ambassadors are not moderators and don't read every post. If you spot an illegal or inappropriate post then please report it to forumteam@moneysavingexpert.com (it's not part of my role to deal with this). Any views are mine and not the official line of MoneySavingExpert.com.0
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