Buying house (no mgage) 'renting' to son questions

nictry

I need some advice, am considering buying a second property (no mortgage) and then allowing my son to live in the property, he would pay 'rent' to us at a nominal level but would not plan to make this official as a rental as essentially it would be transferring his housekeeping at home to payments made whilst he 'house sits' for us

I realise that this may be seen as questionable but principally I am concerned about the legality/taxable implications as you might expect, also whether there are any obvious pitfalls of purchasing the property for cash and ultimately when I come to sell (retirement ~20 years) would I then be liable for anything other than CGT on the profit?

As above, property and all bills would be in my name. Are there any other concerns/issue I should be considering before deciding to progress this idea further

Thanks for any advice as really not sure about the pros/cons of this idea

BitterAndTwisted

I can think of far too many cons and not enough pros with this idea, regardless of the tax-implications.


The moment you accept a penny in rent you will have to declare it on your tax-return as income, regardless of whose names are on the bills or who pays them

nictry

Ok, so we go the route of 'declaring' on the tax return, assume this can be in my wife's name (20% taxpayer) and as such we would comply legally with the HMRC in all regards, do we then have any other issues to consider?

I am not trying to do anything illegal/immoral but simple looking to provide an option for my son to live on his own without being penalised myself

G_M

You'll be a landlord. Simple.

Rent is income for income tax.
Capital Gains Tax.
Gas Safety Certificate/EPC.

Basically all the legal responsibilities that come with being a landlord.

I'm not saying don't do it. I'm just saying if you decide to do it, do it properly!

NewLandlords (information for new or prospective landlords)

BitterAndTwisted

I think your motives are very generous indeed. But by accepting rent you will be acquiring all of the many legal responsibilities of a landlord and your son all of the rights of a tenant.

If buying another property was never in your long-term investment plans I would question why this route would be a good idea. If it was, a tenant who is not related to you would be more sensible and more profitable.

Renting to friends or relatives can bring terrible complications. Most especially if circumstances should change in the future.

Yorkie1

Is your son likely to need to be in receipt of housing benefit? If so, you need to look up 'contrived tenancy' because an arrangement such as you describe is likely to mean that he won't be given it.

Fire_Fox

Please run an advanced search, this comes up several times a week. If your son is paying rent - and even sometimes if he is not - he is a tenant according to the Inland Revenue, your lender and the law. I don't see how you can claim house sitting: this doesn't appear to be your only or main home, it does appear it will be his only or main home, and you haven't mentioned it being a temporary arrangement.

The council tax at the very least should be in your son's name, also he should be on the electoral register. If your son is in receipt of any benefits or means tested payments like student finance he will have to declare that you are subsidising his lifestyle, it is not just cash income. Agree 'contrived tenancy' may be relevant.

If your son has mental or behavioural reasons for not being responsible for his own bills, you may consider Power of Attorney or joint accounts so that you can help manage his income without actively taking money off him. This should mean you won't have to declare all your incomings and outgoings in respect of bills to the taxman so reducing the liability and hassle. If there is no such reason I'd question how much you are helping by treating a grown adult like an irresponsible child.

nictry

I appreciate you may be trying to be helpful but your post comes across as rather patronising and in parts disrespectful

I am not saying and have not said anything other than trying to help my son become self sufficient in a climate that would render this situation impossible through his own means ie his income does not allow any possibility of him buying his own him

He does not claim anything and all I was trying to achieve was allowing him to 'live' on his own in a property I would purchase and he old pay an amount allowing me to essentially receive the same as if the funds were still in my own account

I do not want to profit from him and do not want to cause him or me to be penalised, nothing more nothing less

Please do not jump to conclusions without knowing more facts or assume this is anything other than dealing with an economic climate that does not support children being able to become homeowners by themselves!

Fire_Fox wrote: »

Please run an advanced search, this comes up several times a week. If your son is paying rent - and even sometimes if he is not - he is a tenant according to the Inland Revenue, your lender and the law. I don't see how you can claim house sitting: this doesn't appear to be your only or main home, it does appear it will be his only or main home, and you haven't mentioned it being a temporary arrangement.

The council tax at the very least should be in your son's name, also he should be on the electoral register. If your son is in receipt of any benefits or means tested payments like student finance he will have to declare that you are subsidising his lifestyle, it is not just cash income. Agree 'contrived tenancy' may be relevant.

If your son has mental or behavioural reasons for not being responsible for his own bills, you may consider Power of Attorney or joint accounts so that you can help manage his income without actively taking money off him. This should mean you won't have to declare all your incomings and outgoings in respect of bills to the taxman so reducing the liability and hassle. If there is no such reason I'd question how much you are helping by treating a grown adult like an irresponsible child.

Fire_Fox

nictry wrote: »

I appreciate you may be trying to be helpful but your post comes across as rather patronising and in parts disrespectful

I am not saying and have not said anything other than trying to help my son become self sufficient in a climate that would render this situation impossible through his own means ie his income does not allow any possibility of him buying his own him

He does not claim anything and all I was trying to achieve was allowing him to 'live' on his own in a property I would purchase and he old pay an amount allowing me to essentially receive the same as if the funds were still in my own account

I do not want to profit from him and do not want to cause him or me to be penalised, nothing more nothing less

Please do not jump to conclusions without knowing more facts or assume this is anything other than dealing with an economic climate that does not support children being able to become homeowners by themselves!

Jump to conclusions, what conclusions??? You appear to be reading between the lines, ascribing opinions, motivations or 'tone of voice' to me that are not based in reality. Should I get offended that you make erroneous assumptions and describe me in less than flattering terms when I have tried to help? Try reading my posts in a blunt or brusque tone of voice, it's quite possible with the exact same wording.

I don't give a monkeys whether your son is claiming benefits or has mental health problems or is a student: I used the word IF four times so no conclusions. If you didn't like "I don't see how you can claim ... " that meant to the aforementioned Inland Revenue, lender or the law and I stand by it. The last sentence was the only part that was my opinion, the remainder was factual.

joerugby

nictry wrote: »

Ok, so we go the route of 'declaring' on the tax return, assume this can be in my wife's name (20% taxpayer) and as such we would comply legally with the HMRC in all regards, do we then have any other issues to consider?

I am not trying to do anything illegal/immoral but simple looking to provide an option for my son to live on his own without being penalised myself

If you want the income to be your wife's (for HMRC purposes) then presumably you are happy for her also to own the house?

angelbob

nictry wrote: »

I appreciate you may be trying to be helpful but your post comes across as rather patronising and in parts disrespectful

I am not saying and have not said anything other than trying to help my son become self sufficient in a climate that would render this situation impossible through his own means ie his income does not allow any possibility of him buying his own him

He does not claim anything and all I was trying to achieve was allowing him to 'live' on his own in a property I would purchase and he old pay an amount allowing me to essentially receive the same as if the funds were still in my own account

I do not want to profit from him and do not want to cause him or me to be penalised, nothing more nothing less

Please do not jump to conclusions without knowing more facts or assume this is anything other than dealing with an economic climate that does not support children being able to become homeowners by themselves!

You are not helping your son become self sufficient if you are going to buy him a house and only charge him 'keep'.
By all means buy another house BUT rent to your son at a normal rate and have the bills in his name, he needs to learn to stand on his own to feet OR stay at home.