Does money from my Mum count as rental income?

00ec25

Gallery2084 wrote: »

My point is simply that tax/gifting rules are different for family,

you are perhaps confused about which tax you are thinking of?

yes there are rules about making gifts in terms of inheritance tax

but as we have all consistently told you you are wrong about income tax and receiving income from a property you do not cohabit in yourself. That is taxable rent and you are currently committing (income) tax evasion. Your mother is not a named party to the mortgage therefore the money you are using to pay it is not money that she is spending on her own housing provision, it is income given to you and is taxable as such. If you are so sure then post your source. Do you not see that the reality is someone else is effectively paying off your mortgage, rather than you paying it out of your own (post tax) income. That is patently a way by which you are gaining wealth and is thus taxable.

read this, obviously from the reverse perspective "Any rental income paid to the parents is taxed according to the normal rules for taxing rental income. Similarly, the usual costs are deductible. However, it is possible that the taxman may challenge the commerciality of the let if no rent is paid by the son or daughter."

(the commerciality consideration is in respect of someone claiming costs against their tax if there is no or low rent)

http://www.lawpack.co.uk/tax/property-tax/articles/article7645.asp

getmore4less

If she is struggling with income to need to consider benefits she should stop giving so much away.

sheramber

Gallery2084 wrote: »

Thanks a lot for your response.

I am not doing that but simply questioning what you are saying as I'm not sure you're right.

My Mum would be able to live in that house regardless of how much she gave me, whether she gave me zero or covered the full mortgage. In a few years when she retires I will be paying the whole mortgage. I'd be asking for probably 1200+ a month to rent to someone else whereas my Mum gives me 450. I bought the house so she could live in it as I already have a boat.

My point is simply that tax/gifting rules are different for family, which is why the bank doesn't see Mum as 'renting' so i don't need permission for her to live there. If i rented to anyone else I would need a formal, commercial contract in place, to charge the going rate, take a deposit and promise evitction if they should falter on payment. I am well aware that I could say I receive income from her but I don't beleive in the eyes of the law I am required to in this instance. Everything I have found regarding parents giving children money suggests that I do not need to decalre it as income. The fact that I allow her to live in my house has nothing to do with it as long we don't bother with a universal credit application and make it all offical with a commercial tenancy, which was the only complicated bit as far as I can see.

My original question has been answered however so thank yo all very much. My mortgage interest is only 350 pcm so it will not be worth applying for universal credit as i'll be worse off.

So you only believe an answer that agrees with your view is correct.

If your mother needs to claim housing benefit then stop taking money off her. You did say that she could stay there without paying anything so let her.

No tax implications for you and no need for her to claim housing benefit. Simples