Moving abroad - Renting out my house

rosspwilliams

Hi all,

I am due to move to the Middle East soon with my wife joining me in the New Year. We have decided to rent our house out to her sister, at a slightly lower price than our mortgage (with us covering the rest).

The last thing that I have really thought about is the tax implications of this, and what needs to be done. The rent will be paid directly into our uk joint account, which will then pay the mortgage each month.

I am looking at the the HMRC P85 at the minute and it mentions rental income while abroad. As we won't actually be making any money on it, I wondered if we will need to declare this fact on the form? I am assuming that we do.

Thanks.

BitterAndTwisted

It doesn't matter whether you'll be making a profit on it or not. All of the rental-income has to be declared for tax-purposes. Plus, you will need to secure either Consent-To-Let or a BTL mortgage if you don't own the property outright.

rosspwilliams

Thought as much. Thanks!

BitterAndTwisted

Also, how secure is your sister's employment? Just because she has a rental-agreement does not automatically mean that she will receive HB/LHA for the property should she become unemployed and need to claim. In the current economic climate no-one's job is completely and utterly secure. Read up on "contrived tenancies" for guidance.

G_M

If you do not make the appropriate arrangement with HMRC, your tenant will have a duty to deduct tax before passing your the rent.

Read this post and ALL the links at the bottom.

theartfullodger

HMRC can tax you on what they think is market rent not some cheapo rate you claim to have arranged for relo - to prevent obvious fraud opportunities. Further, if tenant later needs HB/LHA (loss of job, sickness, family crisis) a cheapo deal will probably be seen as "contrived " & no benefits paid.

Got gas safety certificate? Got Landlord insurance?? (If not and place burns down no payout, possibly bankrupt) . Prepared to evict through courts if it all goes wrong - if not you're writing a blank checks.

Got paperwork from HMRC as non-resident Landlord?? If not Tenant must withhold 20% for taxman.

Better off renting to someone else a straight commercial deal then maybe subsidizing relative in someone else's house.

Cheers!!