Advice for renting out a flat we have just inherited please

Bookworm105

cheekyemma said:

Thanks all, this has given me food for thought. We have never been in a position to own a property or get a mortgage or anything,  this has kind of fallen in our lap and we just don't know what's the best thing to do! We were kind of thinking that if anything happened to hubby's job we would have somewhere to live, hence the reason to continue to rent it out but now I'm not so sure! 

given the property appears to have a history of being let anyway then look at how much rental income it produces and compare that to what would you do with the lump sum if you just sold up and invested the money instead. 

 as you are currently living in work related accommodation your view of the flat as a nest egg against the day his job ends is an important consideration when comparing the "investment value" of the flat.

Also bear in mind that because it is job related, the Capital Gains Tax position re the flat is more advantageous than facing CGT on other forms of investment. Provided that you intend to occupy the flat at a future date as your main home when the job related accommodation is lost, then the flat will have total relief from the CGT it would normally face if you already owned the p[lace you currently live in

as others have said, as married couple you will need to be a co-owner of the flat in order to receive a share of the rental income. If not there is "settlements legislation" which specifically covers a low / nil taxpaying spouse receiving income which stems from an asset owned by the higher taxpaying spouse. To avoid being caught by that, you need to be a co-owner and have a deed of trust in place which stipulates what % if the income each of you get. You also need to submit a Form 17 along with that deed to HMRC to evidence the share. There is nothing stopping you having a 100 / 0 split. 

PRAISETHESUN

cheekyemma said:

Thanks all, this has given me food for thought. We have never been in a position to own a property or get a mortgage or anything,  this has kind of fallen in our lap and we just don't know what's the best thing to do! We were kind of thinking that if anything happened to hubby's job we would have somewhere to live, hence the reason to continue to rent it out but now I'm not so sure! 

If you suddenly found yourself in such dire straights that you needed a home in a hurry, you'd be better off having money in the bank rather than a property you are renting out. If the tenant didn't want to voluntarily move out, then the only option left would be that you'd have to go down the legal eviction route, which is a long and potentially expensive process through the courts.

I'd definitely recommend reading up on your responsibilities as a LL as well as drawing up a business plan about how you would cope if things went wrong - expensive repairs, tenant stopping paying rent, etc.

poppy12345

It doesn't sound like you're currently claiming any means tested benefits. What would happen in the future if you needed to claim them? Owning a property you don't live in would be treated as capital for means tested benefits, so if the capital in it is more than £16,000 you would be excluded from claiming all means tested benefits. 

For Universal Credit the rental income from the property isn't treated as income, it's capital. (for anyone reading this)