Can I live in my BTL flat?

booksurr

kingnothing83 wrote: »

Finding a tenant willing to accept those terms may be challenging though perhaps?

I doubt that

your target market was always going to be people who were happy to share a property with someone else

your market remains the same, the only difference is the "sharer" will have full blown tenancy rights rather than very weak lodger rights. The "sharer" will have the place to themselves for days on end yet will not be paying the same level of rent as they would if they had unrestricted use of the whole property

London is crawling with people wanting better than a shared house living with strangers all the time. If nothing else there will be lots of people wanting a London crash pad Mon - Fri whilst they return to their won family at the weekend. If the sums work for you shortage of applicants is not your problem!

Cautious_Optimist

booksurr wrote: »

if you follow this advice do NOT use it when it comes to making your tax return in respect of income tax on rental income and (eventually) the CGT when you sell up as HMRC will make mince meat of you

similarly councils will take some convincing that you and your wife lead separate lives and are therefore each entitled to SPD on your respective "main" residences. It is much more likely London would be designated as a second home - which with a "lodger" (see below) in residence opens up a whole can of worms as to who is liable for the CT under the "hierarchy of liability"

your main residence for tax purposes is where a reasonable person would consider you live: the test is subjective and includes:
- where does the wife life live
- where do the kids go to school
- where do you work
- where do you commute from
- where is your social life based
- where do your friends expect to find you if they call
and
- where do you spend most of your time

BTW - just because you "designate" it as your main home does not, in law, make them a lodger. On the basis of the facts you present they would be a tenant not a lodger

Will there be any rental income to declare?
Not if you keep the lodger's rent below GBP 4250 / year.

Will there actually be any capital gain?
Keep records of maintenance and improvements, just in case.
But property prices are pretty static these days.

Regarding one PPR for OP and another PPR for his wife, I would probably seek further advice about this.
You could try asking HMRC or try the tax forum to start with.

The single person CT discount is only 25pc, but I don't think you need to pay full CT on two properties.

harrys_dad

Ask your MP, they are good at this sort of stuff

Cautious_Optimist

harrys_dad wrote: »

Ask your MP, they are good at this sort of stuff

Flipping MPs!!

teddysmum

Would his wife be able to claim single person council tax status, as he would be staying in the house for 4 days out of 7 ?

Daniel54

Cautious_Optimist wrote: »

Regarding one PPR for OP and another PPR for his wife, I would probably seek further advice about this.
You could try asking HMRC or try the tax forum to start with.
QUOTE]

From Xylophone's link and the section he pointed to.As a married couple you can have only one PPR

"If you're married or in a civil partnership and own 2 or more homes between you, any nomination must be made jointly. It must be signed by both of you. You're only entitled to Private Residence Relief on one home between you."

Kynthia

My thoughts are that this flat is your second home, your primary being where your family live. Then you want to rent a room in this flat to someone. As its not your main residence this person must be a tenant, and as you want to stay there they can only be renting the room and not the whole flat. So you need to see a mortgage broker to find out whether a lender will want you to have a BTL mortgage but allow you to stay there occasionaly, as it's unlikely that they'll allow a tenant to rent a room with a residential mortgage.

For CGT purposes both you and your wife must share your primary residence. I don't know if that would prevent you having different primary residences for mortgage purposes, but unless your wife can qualify for a mortgage on your home alone you are going to be on both. Also even if the flat was the only property in your name, the definition of being a resident landlord means if must be your main home and not owning anywhere else wouldn't change the fact that the NE property is your main residence. Otherwise people who rent out a property and live in a rental themselves could say that their tenants are lodgers.

kingnothing83

Thanks for all the input, hugely useful. I think at the moment the best thing to do seems to be to:
- nominate the NE house as primary residence and pay full council tax there
- see if i can get a BTL mortgage, rent out the flat to a tenant but agree that I can live there 3 nights a week. Advantages of that would be:
- no council tax to pay
- easier to secure 1 BTL and 1 residential mortgage than 2 residential mortgages I would imagine as our income probably wouldn't cover 2 properties without rental income
- no ambiguity about primary and secondary residences

Pixie5740

You would need to check that your BTL mortgage conditions would allow you to be a tenant in the property.

booksurr

Cautious_Optimist wrote: »

Will there be any rental income to declare?
Not if you keep the lodger's rent below GBP 4250 / year.

you cannot claim the rent a room allowance if it is not your main residence - by definition the other person has to be a lodger for RAR to be available and in this case they will not. They will be a tenant in a house share with its owner who uses the property as a second home on an intermittent basis

Cautious_Optimist wrote: »

Will there actually be any capital gain?
Keep records of [STRIKE]maintenance[/STRIKE] and improvements, just in case.
But property prices are pretty static these days.

maintenance is not a capital cost, it is a revenue cost and so is not deductible against CGT

Cautious_Optimist wrote: »

Regarding one PPR for OP and another PPR for his wife, I would probably seek further advice about this.
You could try asking HMRC or try the tax forum to start with.

where I will give him the same answer - under CGT law a married couple can only have one main residence and it must be the same for both of them.
http://www.hmrc.gov.uk/manuals/cgmanual/CG64525.htm
Establishing which property is the main residence (unless a valid CGT election has been made within the 2 year tiome limit - ie "MP flipping") is down to the quality of occupation referred to before
http://www.hmrc.gov.uk/manuals/cgmanual/CG64545.htm
http://www.hmrc.gov.uk/manuals/cgmanual/CG64435.htm
http://www.hmrc.gov.uk/manuals/cgmanual/CG64455.htm

Cautious_Optimist wrote: »

The single person CT discount is only 25pc, but I don't think you need to pay full CT on two properties.

CT legislation operates differently to CGT - under CT it is possible for both a husband and a wife to remain married yet for each to claim SPD if they can prove to the council that they are leading separate lives and therefore each property is indeed the main residence of each of them individually. IMO the OP has no chance of proving that in this case.
You are quite correct however that full CT may not apply - councils have discretion as to what discount to offer on second home but in reality in cash strapped councils the second home discount has been abolished and full CT is charged