Renting out my MIL's property

Kynthia

Daniel54 wrote: »

Tax liability is apportioned by ownership -so your MIL will need to pay tax on her share of the rent and your OH will need to pay tax on his.

Unfortumatley you cannot simply deem that all the rent and all the tax liability is hers -it doesn't work that way

Are you sure? I believe that if the joint owners of a property aren't married to each other they can decide on how to divide the rent and therefore the tax liability however they like, even if that's 0%/100%. The percentage doesn't have to reflect the percentage of ownership.

Miss_Merlot

Amazing! Got my husband to send this (written by me - of course) without him even putting up a fight!

Hi Mr Solicitor,

I hope you're well.

We have recently moved my mother to an assisted living complex much closer to us in xxxx and is settling very well - her new address is xxxxx.

We are now looking to rent out her current property, and could use some advice in regards to the 50% trust left to me in the property after my father's death.

1. On renting out the property, we plan for all the proceeds to go to my mother. However, I'm aware that as 50% owner through the trust, this may not be so straightforward, as despite our intentions for my mother to be full beneficiary of any future rental income, from a legal perspective I may be liable for income tax on my 50% "share". Or would this not apply, given that my mother is still the living owner and myself a trustee?

2. In the event that my mother had to go into residential care, her pension and future rental income should suffice to pay the majority of the care fees, depending on the level of care she might require in the future. My understanding is that - in the event of a shortfall - the Local Authority could not force a house sale whilst I am 50% owner through the trust, but would likely place a charge on the property as a deferred payment in the event of a future sale. Could you please confirm that my understanding is correct?

3. Is it possible to add my wife as Attorney of the EPA in case anything happens to me? If so, what would be the likely cost?

I would be grateful if you could also cc in my wife, Miss Merlot, on any communications, as she is currently coordinating the letting of the XXX property.

Kind regards,

Mr Merlot

Think that covers all bases...?

Miss_Merlot

Does the fact it is a life interest have any bearing?