Renting out house

LukeS88

Hi all, I’m after some advice. My dad has moved out of his house so we are going to rent it out. The house is He is going to let me have the rent money, which will be £850 a month.
What is the best way to go about this ? For him to receive the rent money and then pass onto me ? Or for me to receive the money direct. His only income is his state pension. How does it work out best for tax purposes.

Thanks in advance

00ec25

I assume your father owns the property and you do not?

Therefore legally only your father is "entitled" to the rent. Tax is not based on whose bank account the rent ends up in, it is based on who is entitled to the rent in the first place.
https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim1020

What is your role in the whole letting business?
Who is going to be named as landlord?
Who will actually undertake the role of LL?
Will you be acting as your father's agent?
Is your father still mentally competent or do you have a power of attorney to allow you to act for him?

Why does your father consider it a "good" idea for him to give away his money when it appears he could do with every extra penny he can get?

from a tax perspective the rent is his, if he gives it to you it falls foul of "anti avoidance" legislation which says you cannot give someone else your income stream if the other person does not have any legal ownership of the asset producing the income. father would be taxed as though the income were received by him, even if it were paid direct to your bank account. You, of course, would also be taxed since the cash is in your account.


tell father to take professional advice on his tax fairs and not attempt to DIY, particularly if it impacts his estate when he dies.

xylophone

Have you/ your father read this? It is very important that the landlord is aware of his responsibilities and complies with the law.

https://www.gov.uk/renting-out-a-property

You have said that your father owns the property and therefore the rental income belongs to him - read the information in the link concerning tax and the need to contact HMRC.

G_M

His only income is his state pension?!!! And you are going to deprive him of this useful additional income by taking/accepting the rent?

Well, I shall avoid the obvious moral aspect of this and simply repeat what others have said:

he will be the landlord and all legal obligations as landlord will ultimately be his, although you could act as his 'agent' (or attorney if you have POA). Similarly the rent will be his (eg for tax and benefits purposes) though he is of course free to pass it to you as a gift each month.


See also:


* New landlords: advice, information & links

Comms69

Deprivation of capital comes to mind with this scheme.

LukeS88

My father has just signed over 50% of the property to myself. He has a lot of money in savings so therefore decided to give it to myself and his grandchildren.

theartfullodger

LukeS88 wrote: »

My father has just signed over 50% of the property to myself. He has a lot of money in savings so therefore decided to give it to myself and his grandchildren.

Have land registry deeds been updated to reflect this?

Dad realises this may/will affect benefit payments? (Deprivation of capital).

Dad is due 50% rent and any expenses.

Assuming you've no training do RLA or NLA courses

00ec25

LukeS88 wrote: »

My father has just signed over 50% of the property to myself. He has a lot of money in savings so therefore decided to give it to myself and his grandchildren.

so you have now moved the goal posts and list different facts to your first post


you are a LEGAL owner with a 50% share
the other owner is your father


therefore you are in tax terms a partnership and can therefore agree whatever terms you want to regarding how the partnership profits will be split. That means you can indeed take 100% of the profit if you want


father's gift to you of that 50% share exposes him to tax implications over inheritance tax (PET aka the "7 year rule") and (possible) deprivation of capital

Computer_Beginner

So where is the OP's father going to live?

LukeS88

My father has a new partner who he has moved in with. So would the tax be payable by us both at the end of the year ?

foxy-stoat

LukeS88 wrote: »

My father has a new partner who he has moved in with. So would the tax be payable by us both at the end of the year ?

Suggest you read up on the HMRC website about income tax on rental properties, THEN come back with specific questions.