second home, lodgers and ownership position

guapagirl

Hello there, I'm hoping someone can point me in the right direction as how best to proceed.

We now own our home outright. I work over 200 miles from home and have been lodging there during the week. We have just inherited a substantial amount of money and we thought that it makes sense to use the money to buy a flat where I work and take a lodger in to help cover some of the bills and service charge. I also want to be able to access healthcare there, so it makes sense if it is my primary residence so I can register with a GP etc (I've just had a big health scare and it has been really difficult trying to work and access my home GP and health services).

We are just in the early stages of purchasing and have to make choice between being joint tenants or tenants in common.

We are NOT separating matrimonially, and we have accepted that we will most likely lose the stamp duty unless my next job is a permanent one and we sell both the family home and the flat and buy a permanent home wherever the job takes me.

What I'm not sure about is:
1, Can I actually make the second home my primary residence in practice (i.e. not for tax reasons) if my husband has a primary residence in the family home?
2, If I can, what is the best way to organise the ownership of the second home between us both?
3, If the second home cannot be considered as my primary residence, that presumably means we can't have a lodger but must have a tenant which also means I am also a tenant?
4, If we have to have a tenant, can it be made so my husband is the landlord and not me because he is not a tax payer, so it makes more sense than for me to have to pay additional income tax.
5, If I want to get some definitive advice, who do I need to talk to, a lawyer or a financial advisor?

I know I sound clueless and I am. We have never been in this position before and just don't know what to do for the best or who to ask for advice!

Any suggestions gratefully received.

Thanks, Liz

ETA: Please move if this would be better in a different forum

G_M

guapagirl wrote: »

....

What I'm not sure about is:
1, Can I actually make the second home my primary residence in practice (i.e. not for tax reasons) if my husband has a primary residence in the family home? no.
2, If I can, what is the best way to organise the ownership of the second home between us both? n/a
3, If the second home cannot be considered as my primary residence, that presumably means we can't have a lodger but must have a tenant which also means I am also a tenant? No. If the 'lodger' does not have 'exclusive possession' because you are there durig the week (or is it weekends - I got a bit lost) then he's a lodger
4, If we have to have a tenant, can it be made so my husband is the landlord and not me because he is not a tax payer, so it makes more sense than for me to have to pay additional income tax. whose is the registered owner?
5, If I want to get some definitive advice, who do I need to talk to, a lawyer or a financial advisor?
Both - but make sure they understand property and tenancy law. And tax law might be useful


ETA: Please move if this would be better in a different forum

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guapagirl

G_M wrote: »

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Thanks for that.

but I'm still unsure because if the the lodger doesn't have exclusive use and their name is not on any bills, but mine is, can I not have the property as my primary residence in practice? I'm there monday to friday and really need to register with a GP there which I can't do if I'm not 'resident' in the area.

Do tax/property/law specialists have some kind of special name or qualification that I can google?

Fish&Chips

Perhaps you need to go on the Electoral Register at the new property to show that it is your main residence? (Obviously you must then come off it at the matrimonial home)

Pixie5740

A married couple can only have one primary residence so you cannot set this second property up as your main residence whilst simultaneously your husband is declaring the other property as his main residence.

I'm not sure that the person sharing the second property with you would be classified as an excluded occupier. According to the Gov website, "You’re a resident landlord if you let out part of a property which is your only or main home."

https://www.gov.uk/rent-room-in-your-home/becoming-a-resident-landlord

G_M

I think Pixie is right.

The first issue is whether the property is the OP's 'only or principal home'. As Pixie says, you can only have one between a married couple so you'd need to establish which it was.

The 2nd issue is then whether a 3rd party occupier would have a tenancy or an Excluded Tenancy.

If the property is not the only or principal home, then the occupant would not be an Excluded Occupier. See

http://www.legislation.gov.uk/ukpga/1988/50/section/31

unforeseen

If you declare the fat as the principal residence it sorts the lodger problem. Hubby would then be living in the secondary residence.

Shouldn't be a problem, http://www.lawpack.co.uk/tax/property-tax/articles/article7648.asp

davidmcn

Fish&Chips wrote: »

Perhaps you need to go on the Electoral Register at the new property to show that it is your main residence? (Obviously you must then come off it at the matrimonial home)

No, you can be on the electoral register at all of your residences if you like. The restriction is on how many times you vote in each election.

davidmcn

G_M wrote: »

I think Pixie is right.

The first issue is whether the property is the OP's 'only or principal home'. As Pixie says, you can only have one between a married couple so you'd need to establish which it was.

The 2nd issue is then whether a 3rd party occupier would have a tenancy or an Excluded Tenancy.

If the property is not the only or principal home, then the occupant would not be an Excluded Occupier. See

http://www.legislation.gov.uk/ukpga/1988/50/section/31

Where does it say for the purposes of the Housing Act that a married couple can only have one principal home? Rules in tax legislation aren't simply going to be implied into landlord and tenant law. I would expect it to determined as a matter of fact. But the OP will need to do more than register with a GP to make that sort of argument.

booksurr

for the purposes of tax a married couple can only have one main residence between them. That means the flat would not be classed as your main residence for income tax purposes, so you could not claim the rent a room allowance, the "lodger's" rent would be taxed under the normal method, ie income - expenses = taxable profit.

the tax liability will fall on whoever is entitled to a share of the income. For a married couple that must in all cases reflect the underlying ownership. If you both own then the income tax liability is split between you 50/50 if joint owners or some other fraction if you are tenants in common. If only one owns then that is the person who is liable for the income tax on the rent.

Whether you decide husband will be the sole owner or whether you jointly own makes no difference for Stamp Duty (it will be the higher rate as married couples are one "unit" whether they split ownership or not) and for capital gains tax as it will not be the main residence under tax law.

for council tax purposes you cannot claim the single person discount for obvious reasons a) there will be more than one person resident! and b) it will not be your sole/main residence..

for the purposes of GP's etc the tax related definition of main residence is irrelevant. If you split your time between 2 places then you are perfectly entitled to register in the area of your choice. The restriction is you cannot register in both places simultaneously. As you will be genuinely residing in both places you can go on the electoral roll at both places should you wish (but can only vote once!)

booksurr

davidmcn wrote: »

Where does it say for the purposes of the Housing Act that a married couple can only have one principal home? Rules in tax legislation aren't simply going to be implied into landlord and tenant law. I would expect it to determined as a matter of fact. But the OP will need to do more than register with a GP to make that sort of argument.

the Housing Act does however define excluded occupier in the context of whether there is a "resident LL" and it defines resident LL as being someone who occupies the building as their sole/main residence

see para 10 http://www.legislation.gov.uk/ukpga/1988/50/schedule/1

as you know there is no legal definition of "main residence" within the Housing Act, but I would question your assertion that wider case law is not informative of the position. There is extensive (tax related) case law clarifying certain aspects of how people "use" more than one property and therefore which one of them is the "main" property