Inherited flat rented out by my sister

skinnyhelen1973

Mum lived rent free in my sisters flat whilst mums flat was rented out. Mums flat was much bigger so it was beneficial for my sister to swap flats and rent out the more expensive flat. Now my mum has passed and my sister and I have inherited her flat.
The way I see it - the rental income should be shared from the moment of my mums passing. Perhaps put it in a separate account until probate is completed.
My sister thinks that she is entitled to the full rent until she has cleared and updated her own flat and find tenants for it.

who is in the right?

FlorayG

So your sister had the rent from your mums flat? In effect, your mum rented out her flat and gave the same amount of money to your sister for the rental of the sister's flat. I think that's the legal state of affairs, because you can't rent out something you don't own.
Now your mother has died the flat belongs to both of you equally, so you share the rent equally. I assume your sister lives in a third property? So I don't understand 'cleared and updated her own flat' do you mean she wants now to rent out both? What she does with her own property is her affair - the one your mother left to both of you belongs to both of you and the rent belongs to both of you because your sister was never 'entitled' to the rent from your mother's flat in the first place
In fact, the rent may even belong to your mother's estate and should be calculated from the date of her death until probate as part of that ( although I'm not so sure about this point)

skinnyhelen1973

Yes my sister has her own house. My mum owned the first floor maisonette and my sister the ground floor including the freehold. 

I agree that the rent is part of my mums estate and should be shared equally.

my sister is the executor of my mums will and in no rush to get anything done. 

sammyjammy

I bet she isn't given she is receiving the rent for the flat!  Have you discussed what you want to do with the flat or given the tenants an S21?

FlorayG

You need to explain to your sister that the rental money was NEVER hers, it was your mother's. Your mother rented your sister's flat with the proceeds. Now mother is dead, nobody is renting your sister's flat so there is no income from it. Mother's flat still has an income, all of which belongs to her estate

sheramber

Does your sister pay tax on the rental income?

madbadrob

skinnyhelen1973 said:

Yes my sister has her own house. My mum owned the first floor maisonette and my sister the ground floor including the freehold. 

I agree that the rent is part of my mums estate and should be shared equally.

my sister is the executor of my mums will and in no rush to get anything done. 

Im struggling.  Are we talking three properties here or 2 with your mum living with your sister in the downstairs flat?

Technically the maisonette is now owned by the estate and any income goes into the estate.  Any monies needing spending on the property such as the annual gas check, building insurance can be taken from that.  When the executor calls in the property and sells it then that and the rental received from death are then shared equally between you and your sister unless the will says differently.  Unfortunately you cant force the executor to rush however you could get a solicitor to start the proceedings to have her removed as executor.  

Have the tenants been told of the passing of your mum and that the tenancy may now have to be ended so you can sell the property?  

This could be a genuine hold up to the settling of the estate.

In conclusion though the rental from your mothers flat is now owned by the pair of you and when the executor finally settles the estate you should get 50 percent of that minus any legitimate expenses spent on recovering the property ending the yenancy gas checks building insurance etc

Rob

skinnyhelen1973

sheramber said:

Does your sister pay tax on the rental income?

Yes I believe she does. 

FlorayG

skinnyhelen1973 said:

sheramber said:

Does your sister pay tax on the rental income?

Yes I believe she does. 

legally, your mother should have been paying tax on it as it was her income. After that she should have given the remainder to your sister as rental for your sister's flat, who would also pay tax on it. 'Passing on' rental income directly is not something HMRC would be happy about. I think your sister should not be making any arguments at this point because what she has been doing is probably illegal - as I said before, you can't rent out something you don't own