renting to a family member

help_please_2013

I own outright a second property. If I let my son leave there rent free do either of us incur any tax liabilities .

Thanks 

Brie

It's your second property so there are tax implications when you sell.  Your son being resident would be liable for council tax.

Were you expecting something else?

_Penny_Dreadful

help_please_2013 said:

I own outright a second property. If I let my son leave there rent free do either of us incur any tax liabilities .

Thanks 

If there's no rental income then no income tax is due and there's no such tax as a "free accommodation" tax anywhere in the UK.  The only tax that will eventually come into play is Capital Gains Tax when you sell the property but as this is already a second property for you CGT will be applicable whether your son lives in the property or not.

theartfullodger

You are likely to be liable for (? extra ? ) CGT as YOU wouldn't be living there (assuming prices go up.... ).


The common view of course is never rent to friends or family (v quick way to ruin relationship), IMHO more so for zero charge.

What would he pay for (eg repairs, improvements etc etc?).  "Rent" does not have to be £££££_

propertyrental

theartfullodger said:

You are likely to be liable for (? extra ? ) CGT as YOU wouldn't be living there (assuming prices go up.... ).

already a 2nd home so already applies. Son moving in changes nothing

help_please_2013

Brie said:

It's your second property so there are tax implications when you sell.  Your son being resident would be liable for council tax.

Were you expecting something else?

Perhaps a tax bill of some sort  for giving my son the gift/benefit of leaving rent free. Or even a tax bill for rent I have sacrificed 

propertyrental

help_please_2013 said:

Brie said:

It's your second property so there are tax implications when you sell.  Your son being resident would be liable for council tax.

Were you expecting something else?

Perhaps a tax bill of some sort  for giving my son the gift/benefit of leaving rent free. Or even a tax bill for rent I have sacrificed 

well you can breathe easy on those 2 counts...!

user1977

Is it genuinely "rent-free"? i.e. you'll be paying for all the normal things a landlord would? If your tenant starts e.g. carrying out maintenance for you, that can be deemed to be "income" and taxable as if it were rent.

dimbo61

Please make sure you have a EPC. EICR,  GSC and home insurance !
Now do you need Landlord insurance ? 

AlexMac

theartfullodger said:

The common view of course is never rent to friends or family (v quick way to ruin relationship), IMHO more so for zero charge…

Oh dear, ArtiLodge, we’ve already broke your guidance by letting our BTL to the Granddaughter!  Albeit on a (softish) rent which she has never defaulted on. 

So the downside is the potential ruined relationship, but the upside is; 

- a young woman able to live independently with consequent great advantage in terms of self-esteem (and relationships); few 27 year olds could afford to rent, let alone buy round here. 

- never a rent payment missed; but then she (and her mum) have absolutely no sense Of entitlement. 

- a strengthening relationship with me, and a developing mutual trust, despite the fact that as I’m a second time husband, neither she nor her mum are my bloodline. So strong that I’ve just appointed her as my attorney in my enduring POA!

But I guess it could all go T17s up?  

Oh, and re Tax, I do pay it on the rent, and I anticipate a whopping CGT if we ever sell (or IHT if we don’t) since, as others have said, it’s just a second property. But then you only pay CGT if you make a gain; which we’ve luckily done in spades since we bought it when dear GD was a baby, 26 years ago!

km1500

do you also comply with all the legal requirements of an assured shortfold tenancy such as annual gas and five year electrical safety etc. (failure to do this is a criminal.offence)