Advice on a 2nd home please!

Simms92

Current situation:

I own 1 property, I have lodgers that live with me. I am not required to pay tax due to the allowance available. I currently have a mortgage on my property.

Providing I can get a 2nd mortgage (this is possible right?), I want to live in both homes (my new job is quite a distance away), and put 2 lodgers into that home too.

Is there any problems doing this? I understand I'd have to start paying taxes on the extra income. Is there anything else I haven't considered?

Thanks in advance

G_M

The rent-a-rppm scheme only applies to your main residence.

You cannot have 2 main residences.

There is also a risk that the 'occupants' of the property that is not your 'main residence' could claim to be tenants, notlodgers, since your presence tere will be intermitant and they could claim 'exclusive occpation'.


* Lodgers: advice & links for landlords & lodgers

Under rent-a-room a taxpayer can be exempt from IT on profits from furnished accommodation in their only or main home if the gross receipts they get (that is, before expenses) are £7,500 or less for tax years from 2016-17

https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim4001

Simms92

G_M wrote: »

The rent-a-rppm scheme only applies to your main residence.

You cannot have 2 main residences.

There is also a risk that the 'occupants' of the property that is not your 'main residence' could claim to be tenants, notlodgers, since your presence tere will be intermitant and they could claim 'exclusive occpation'.


* Lodgers: advice & links for landlords & lodgers
https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim4001

I understand the scheme only applies to my main residence, that doesn't stop me taking in lodgers in a second home though? I'd just have to pay tax on the income from the lodgers in the 2nd home?

G_M

Simms92 wrote: »

I understand the scheme only applies to my main residence, that doesn't stop me taking in lodgers in a second home though? I'd just have to pay tax on the income from the lodgers in the 2nd home?

Correct.

Provided you don't get into the tenants Vs Lodgers dispute..... I just higlight it as a potential risk.

As a more extreme example, we occassionally see her LLs who 'reserve' themselves one room in their 2nd property, and maybe sleep in it 1 night a month. The other occupants have sucessfully claimed they are tenants, with full teancy protection.

Now where the boundary lies (number of nights the LL stays over etc) is a moot point which only a judge could ultimately decide, based on the exact circumstances.