Famiing renting rent free

jake28

Hi

I am hoping I have posted in right place as this is first time.

I own 2 homes one which I have just moved into and one that I lived in until a couple of weeks ago.

Houses are not selling where I used to live so I have decided to let my son live in the house until the market picks up.
I want to let my son live in there without charging him rent for a few months to help him out financially but am unsure about the tax situation.
Will I need to pay tax on the rental value that would normally be charged? or is he ok to just live there until he gets on his feet a bit.

Hope someone can help.

Matt1977

I hope I am right but hopefully someone else can confirm this...

If the rental income is below £4,250 (?) a year then there should be no tax to pay.

McKneff

As far as I know Matt is correct.

I would also like to say what a nice dad you are, hope your son appreciates you:D

G_M

No. Matt and McNeff are thinking of the rentaroom scheme which applies to lodgers. Since the property in question is not your own home and you do not share it, your son is not a lodger.

However, if no rent is being paid:
a) son is not a tenant either (a tenancy would require 'consideration' ie cash to change hands) and
b) there is no income, therefore no income tax liability

If you keep the property long term, eventually Capital Gains Tax may be payable when you sell.
If you rent properly (ie charge rent) then income needs to be declared and tax paid if relevant.

See here.

ManAtHome

Things change if your son claims housing benefit though.

*Robin*

ManAtHome wrote: »

Things change if your son claims housing benefit though.

Why would the son attempt to claim housing benefit if he doesn't have to pay rent?

McKneff

*Robin* wrote: »

Why would the son attempt to claim housing benefit if he doesn't have to pay rent?

You would be surprised at the thousands of people who do,

ILW

McKneff wrote: »

You would be surprised at the thousands of people who do,

I wouldn't, it's rampant.

angrypirate

You will only pay tax on the income less your personal tax allowance. Having said that, it may be best to charge him a peppercorn rent - say £1 a month - that way there is an official rental agreement set up.

Jowo_2

*Robin* wrote: »

Why would the son attempt to claim housing benefit if he doesn't have to pay rent?

Many landlords who rent separate properties (where they don't live) to their close relatives charge rent, therefore so long as they have a proper formal commercial arrangement, those tenants on low income can qualify for housing benefit.



The benefits forum regularly receives posts from lodgers and landlords who are closely related bitterly complaining that as they both live in the same property, they cannot get the state purse to pay their rent. They don't think they should pay house keeping costs out of their existing benefits, such as job seekers or ESA, or their family should support them. They think the lodger ought to be able to claim housing benefit on top of it, and for the landlord (usually their parent or partner) to receive the full market rent for their accommodation. It is seen as most unfair that they can get full HB if they were not living in the same property as a close relative or a partner.