Buying a buy-to-let as sole property - stamp duty?

booksurr

calad1 wrote: »

We spoke briefly to a mortgage broker ..... She also said that it wouldn't matter who we were planning to rent out to,

really :eek:

letting to family makes it a Regulated BTL mortgage product, which is a very different animal to a normal BTL mortgage. Have you checked if the broker is a qualified financial adviser?

http://www.property118.com/what-is-a-regulated-buy-to-let/29139/

calad1 wrote: »

we'll split their rent between us so she has the chance to save some money up while we're abroad.

3 things:

1. you will be abroad, therefore will need to register with the HMRC Non Resident LL scheme
https://www.gov.uk/tax-uk-income-live-abroad/rent

under the UK/USA tax treaty you are taxed once on rental income by HMRC and will not be taxed again by the IRS

https://www.treasury.gov/resource-center/tax-policy/treaties/Documents/uktreaty.pdf

2. your sister has no entitlement to a share of any rent you get since she has no stake in the property. So the tax liability on that income would be all yours even if you give her some money from it. If you "split" the rent with her then whatever you give her is from your POST tax amount, not your pre tax amount.

3 your sister could take in her own lodger and have that tax free under the rent a room scheme. You would not entitled to any of that money directly, but could of course inflate the (taxable) rent sister pays you to reflect the fact she has her own income stream to part fund what she pays you

calad1

deannatrois wrote: »

What do you mean by this? Are you hoping she'll save some of the tenants rent money if you allow her to take it? Do you trust her enough to do this?

Will she be 'managing' the lodger arrangment? Do you think she will be able to do this? Are you/she prepared for taking on LL responsibilities?

We'll split it, she says she wants to save her part to start building up savings for the future. But it's not any of our business really, she'll use it for what she wants. Our half will be for taxes/maintenance of property etc. Lodger will be chosen by my sister, her rent will cover our mortgage expenses, anything a lodger brings in will be extra. Yes she is capable of managing the lodger arrangement, plus my parents live nearby and will be first contact for repairs etc.

Thrugelmir

calad1 wrote: »

We spoke briefly to a mortgage broker a few months ago who felt it should be OK finding a mortgage as we would probably only require around a 20-30% mortgage. She also said that it wouldn't matter who we were planning to rent out to, as long as the mortgage company felt the projected approximate rental return would be fine.

I'd personally find another broker.

kinger101

Most points already covered here, but if you sister doesn't pay the rent, are you happy to evict her?

calad1

kinger101 wrote: »

Most points already covered here, but if you sister doesn't pay the rent, are you happy to evict her?

I imagine it'd be horrible and cause family ructions, but yes we could evict her. If we had to evict, we'd find another tenant and they would undoubtedly pay a much higher rent, if we charged market rate rather than 'mates rates'. So it'd work OK for us financially.

calad1

booksurr wrote: »

really :eek:

letting to family makes it a Regulated BTL mortgage product, which is a very different animal to a normal BTL mortgage. Have you checked if the broker is a qualified financial adviser?

http://www.property118.com/what-is-a-regulated-buy-to-let/29139/

3 things:

1. you will be abroad, therefore will need to register with the HMRC Non Resident LL scheme
https://www.gov.uk/tax-uk-income-live-abroad/rent

under the UK/USA tax treaty you are taxed once on rental income by HMRC and will not be taxed again by the IRS

https://www.treasury.gov/resource-center/tax-policy/treaties/Documents/uktreaty.pdf

2. your sister has no entitlement to a share of any rent you get since she has no stake in the property. So the tax liability on that income would be all yours even if you give her some money from it. If you "split" the rent with her then whatever you give her is from your POST tax amount, not your pre tax amount.

3 your sister could take in her own lodger and have that tax free under the rent a room scheme. You would not entitled to any of that money directly, but could of course inflate the (taxable) rent sister pays you to reflect the fact she has her own income stream to part fund what she pays you

Thank you, all this information is extremely useful.

agrinnall

bris wrote: »

You have to pay it as it's a BTL whether you own a property or not.

It's not like you to be so wrong and to be so categorical about it, I hope you pay attention to the posts that explain why you are wrong and don't repeat the mistake again.