POA or gift the house (to rent)

elmo43

Looking for some more advice please if anyone can help please. 

We have been looking at options for my dad to move in with me, we discussed selling both properties to buy a bigger house but as he does not want to sell we are looking to put an attic conversation in my house so we have more room and renting his house out to my brother. The local council has confirmed he would not need to register as a landlord as he would be renting to family. Also I believe a landlord doesn’t need to be registered self employed only fill out a self assessment for tax each year? 

As my dad is getting on in years he doesn’t want to be dealing with everything that comes with renting out a property, tax assessment each year etc. I would like to take on everything but not sure the best way to do this.  I think if I’m acting as his agent I’m limited to what I can do? If I was poa could I then be the landlord, fill out the tax form in my name and just put the money into my dads account after tax or would the tax etc all be in his name? The other option we have been given is for him to gift the house to me then everything is in my name. 

Can anyone advise the best way forward so my dad is not involved and his tax circumstances etc doesn’t change? 

We live in Scotland, I have a full time job which I pay tax, the additional rental income would not put me over the £50000 bracket. I have a mortgage on my house. My dad owns his home outright  

user1977

If you're acting as his Attorney under a Power of Attorney then you are simply dealing with his affairs on his behalf - so his tax is still his tax, it doesn't become mixed up with your own finances.

theartfullodger

Whilst being full of admiration for Scottish councils I wouldn't take their advice on housing law any more than I'd take advice on council legislation in Scotland from a specialist landlord/tenant solicitor based in England.

Given possible fines of up to £50k if in breach of registration law I'd register.  There might also be insurance requirements depending on what policy for which sector from what insurer.

You are proposing a minefield down with several types of explosive mine.  Get specialist legal advice (IE probably not your local high street solicitor)

xylophone

Re PoA
https://www.publicguardian-scotland.gov.uk/power-of-attorney

Once you have PoA, (your father should see a solicitor), you will be able to manage his financial affairs including dealing with HMRC.

Whilst being full of admiration for Scottish councils I wouldn't take their advice on housing law any more than I'd take advice on council legislation in Scotland from a specialist landlord/tenant solicitor based in England.

There is some guidance here which indicates an exemption. 

https://www.mygov.scot/renting-your-property-out/registration

Exemptions

There are some situations where you do not have to register with a council to rent out a property. These include:

• holiday lets
• houses managed by religious orders
• houses with a resident landlord
• houses with agricultural and crofting tenancies
• letting to family members
• houses providing care services governed by Care Inspectorate regulation

elmo43

If poa means any issues, financial and legal problems all come to me and he can in no way be accountable that would be great. So I be filling out a self assessment for him, my worry is his pension may somehow be affected by him earning money from rental income. He would also prefer it was all in my name. 

We will be seeking legal guidance before going ahead with anything. 

user1977

elmo43 said:

If poa means any issues, financial and legal problems all come to me and he can in no way be accountable that would be great. 

No, like I said above if you're acting as his Attorney under a Power of Attorney then you are simply dealing with his affairs on his behalf. He would still be the landlord with all that entails.

xylophone

If poa means any issues, financial and legal problems all come to me and he can in no way be accountable that would be great. Would the tax be in my name or would I be filling out a self assessment for him, my worry is his pension may somehow be affected by him earning money from rental income. 

Have you read through the link in my post above (menu on right hand side)? It is very important that you and he should do so.

Once your father has granted you PoA and it has been registered (see link), you will be able to deal with his affairs on his behalf.

This includes completing his Tax Returns.

His pension income is his income and the rental income will be his income.

In this regard see

https://espc.com/lettings/tax-requirements#:~:text=Do I need to pay,is your “property allowance”.

If his total income from all sources is in excess of his personal allowances, then he will pay tax at the appropriate rate on that excess.

AdrianC

If you want to be landlord, buy the house off your father for full market value.

Otherwise, he's the landlord. He has all the legal responsibilities, he receives all the income, he pays tax on his income.
POA simply means you can act on his behalf to do it without needing his signature. You MUST act in his best interests. That will not include a below-market-rent tenant, and it CERTAINLY will not include a below-market-value change of ownership to you.

elmo43

Thanks I had missed the first message. He basically wants to move in with me and hand everything over to me to deal with and not to cause an issue with his pension. He is wanting to gift me the house that way it’s all out his hands. I was hoping there was a not so drastic solution and he didn’t need to sign his house over. So the choice is either poa, tax remains in his name or gift the house then everything is my responsibility. There is no another option we have not considered. 

Slithery

Gifting you the property also comes with a range of issues to consider, especially if he later needs care funding...

https://www.ageuk.org.uk/information-advice/care/paying-for-care/paying-for-a-care-home/deprivation-of-assets/

AdrianC

Him gifting you tens - perhaps hundreds - of thousands of pounds worth of asset is probably the worst possible idea.

If he does not want to run a residential lettings business (either himself or with you acting on his behalf under POA), and you cannot buy it off him for market value, then his best bet is to sell it on the open market.