Moving in to boyfriend's house, implications when renting my flat to friend

Tiggerwendy_2

Hello there

I have searched the forums but have yet to find the advice I need.

I am planning to move in with my boyfriend in his house which is in his name and he has a morgage on. We intend to keep the mortgage and house in his name, certainly initially. He's not bothered about me paying, although I've said I'll pay a fair contribution to the mortgage/bills. I have a flat in my name with a small (£150 a month) mortgage on that I've had for about 7 years. I don't want to sell it as it's my security, I have hardly any pension building up and the mortgage is easily coverable if I have no tenant. A friend of mine wants to rent my flat, I've said for around £300 as that more than covers my mortgage and is a bargain for her. She's a friend I know I can trust and I don't envisage any problems, but not a close enough friend for the landlord/tenant relationship to cause a problem and damage an important friendship.

I realise from what I've read that I need to contact my mortgage provider and from what some have said this may mean that my mortage reduces/increases or stays the same! I also realise that there are tax implications.

My queries are:
How can I find out how much tax I will have to pay? Is it worth me charging my friend more than my mortgage if I'm just going to have to pay tax on anything over the mortgage interest cost?
What about if I sell the flat in the future? I realise there is CGT. Am I right in thinking that if I sell it after 3 years of renting it out, I can't avoid CGT on any rented out time after 3 years, even if I temporarily moved back in as my PPR?
Is there tax implications for my boyfriend as doesn't me paying towards his mortgage/bills effectively count the same as rent, just like i'd be getting from my friend for my flat?

I'm just a bit lost as to where to go for advice. Obviously there's the tax office, but they're not going to help me reduce these costs as much as possible! I want to do things properly, as I hope that this will be a long term situation.

Hope this is the right place to post, please move if not.

Thanks for your time and any advice/help would be very much appreciated.

Wendy

CLAPTON

you could of course decide not to formally move into your BFs but to:

retain your flat as your prinipal residence.
let a room under the 'rent a room scheme' which means you dont pay any income tax and there are no potential CGT for the future (up to 4,250pa rent is allowed)

the fact that you are very rarely there is purely incidental.
you would need to check out the implications for your house insurance and tell the mortgage lender.

sandy2_2

The tax office is there to help you get it right, not to give you wrong information and make you pay more tax than necessary

GreenNinja

CLAPTON wrote: »

you could of course decide not to formally move into your BFs but to:

retain your flat as your prinipal residence.
let a room under the 'rent a room scheme' which means you dont pay any income tax and there are no potential CGT for the future (up to 4,250pa rent is allowed)

the fact that you are very rarely there is purely incidental.
you would need to check out the implications for your house insurance and tell the mortgage lender.

This is very good advice! Take it.

:j

Tiggerwendy_2

Thanks, that sounds like a solution. I knew this place would know the workaround if there was one! (That's what I meant about wanting advice away from the tax office who I doubt would have suggested that)
I'll have a chat to my friend to see if she'd agree to it, as from what I've read this afternoon it seems she'll officially have less rights as a tenant of an officially residential landlord, even though I have no intention of giving her short notice to leave etc.
Thanks again.

silvercar

She would be a lodger rather than a tenant; very limited rights. But then she is getting a good deal on the rent.