get around paying tax on rent income

mossrax

Hi, i have a house that i rent out and i also work part time so i`m taxed on the rent. Is there any way i can pass this money directly to my children so it wont be taxed. Thanks

clutton_2

Do you claim all the expenses you possibly can to off-set against the rental income ? if you run a BTL business (even one house) you can claim an office at home and can claim 1/6th of heat/light/power/gas/community charge (if you have a 6 roomed house) ; claim postage for letters to tenants, phone calls to tenants, inspection visits (keep a mileage record); repairs, cleaning, insurance, voids, stationery, membership of professional bodies, books/magazines you buy to further your education re BTL, computer and computer software to run the business, letting agents fees (if you use one) CORGI gas inspection fees, mortgage interest repayments, courses you have attended; accountants fees, - the list goes on and on !! you will find that you can reduce your profit margin significantly by careful accounting. Do you have an accountant - worth their weight in gold , as long as they have a portfolio themselves and as long as they have other BTL landlords on their books.

Mutton_Geoff

Is your BTL 100% mortgaged as well? As well as the mortgage on the property itself, can the remainder be accounted for by loans/mortgages elsewhere that were used to purchase the BTL?

bury_2

If you run a business from a rented house / flat say two beds what could you claim?

clutton_2

the inland revenue are hardly going to come and inspect every house to see if you have a fully professional office instead of a spare bedroom !! but you are using "home resoureces" for the business, so everything that i have outlined above can be claimed. IR look for reasonable expenses. the type of expenses clearly depends on the business. i do a lot of mileage, so i keep a mileage log and claiim that, as it is more to my advantage, other business which do not drive so much keep repair bills - get some advice. the IR run free self employed courses, even if you are thinking of going self employed.

seven-day-weekend

mossrax wrote:

Hi, i have a house that i rent out and i also work part time so i`m taxed on the rent. Is there any way i can pass this money directly to my children so it wont be taxed. Thanks

I think if the house is in your name the income would still be classed as yours, even if it came to your children.

liz545

mossrax wrote:

Hi, i have a house that i rent out and i also work part time so i`m taxed on the rent. Is there any way i can pass this money directly to my children so it wont be taxed. Thanks

Be warned that if you're dodging tax, and your tenants get wind of it, you could be in trouble. Someone I knew had his landlord attempting to withhold his deposit for no good reason; and so mentioned the fact that his landlord insisted on cash payments and never provided a receipt to the taxman... The best you can hope for is minimising your tax liability, IMHO!

dmg24

Hi, i have a house that i rent out and i also work part time so i`m taxed on the rent. Is there any way i can pass this money directly to my children so it wont be taxed. Thanks

Is there a reason why it shouldn't be taxed? Any other type of income received by a parent to then give to their child is taxed?

F_T_Buyer

If you say your home is also used as an office (hence offset some costs) you may be liable to capital gains tax on your main home. This tax business is a minefield, and you really should see an accountant.

Or you could just pay tax like everyone else...

BobProperty

mossrax wrote:

Hi, i have a house that i rent out and i also work part time so i`m taxed on the rent. Is there any way i can pass this money directly to my children so it wont be taxed.

Yes, sort of, give them the house. :eek: Still want to do it?

Ian_W

clutton posted:the inland revenue are hardly going to come and inspect every house to see if you have a fully professional office instead of a spare bedroom !!

They don't have to - you have to show any expenses claimed are justified and "wholely and exclussively" for business. If you work full-time from home there may be a case for claiming 1/6th, or whatever, of your household bills but to run a single BTL - I very much doubt. And even then F_T_Buyers point about CGT may well cost you more than you save in income tax. Our accountant advised a nominal amount [from memory £250pa] should be claimed for a home office when running a holiday let which involved far more work with weekly bookings than a BTL with 6 monthly contracts.

Otherwise do claim all legit expenses to do with the BTL and do think about getting an accountant. I know ours saved us more than their bills - which are, of course, an allowable expense.

As for putting the income in your child's name - unless they own the property and pay the mortgage - YER AVIN A LAFF - AINT CHA?