rental income on a joint mortgage

nicjaney

Hi,

I went into a joint mortgage with a friend last year and they now want to move out and move a lodger in to pay their 'rent.'

Is my friend correct in thinking that he can still benefit from a 50:50 equity split when we sell (after initial deposits are withdrawn - as drawn up in a deed) if he hasn't technically contributed over the next two years?

I thought that since it is rental income then we must both declare it 50:50 to the taxman and so surely the 'rent' should be a contribution to the house and not to one person in specific.

i.e when we come to sell (in two years) the quity split (time apportioned) for those years should be 75:25?

I'm having real trouble finding information on the internet about this. I think where our communication falls down is his lack of awareness of being a home owner as opposed to a renter. When you rent, the landlord does not care if you move out and move someone in. But with a mortgage I beleive the rules are stricter.

Anyway, any advise on the equity split would be appreciated. I think I should be entitled to some extra gain since I have to now live with a lodger and my friend has apparently left the agreement without any detrimental consequences.

Many thanks

Thrugelmir

All I can envisage with type of arrangement is arguments in the future. As to who is liable for what.

Personally I would look to sell and terminate the agreement.

getmore4less

You have to change the way you think on paper it works more like this.

You and other person own a house.

The lodger and you both rent from you and the other owner you get 1/2 each of that and then pay your shares of the mortgage from that rent.

So on paper you pay yourself and the lodger pays the other person

So the deal stands 50:50 as long as they keep paying their share of the mortgage and insurance.

You are still living with one other person.

You could stump up the full rent for the place and get your own lodger not one picked by the other person.

Actualy the other person cannot get a lodger in because they are no longer resident so you are probably liable for all the tax if there is any.
(rent a room should apply)

THe tax situation does not change your agreement(unless you put it in the agreement)


Shame you did not draw up a proper agrrement that covered all eventualities.