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Renting my spare bedrooms out to my friends

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Renting my spare bedrooms out to my friends

edited 30 November -1 at 1:00AM in House Buying, Renting & Selling
32 replies 2.5K views
Ryanbell94Ryanbell94 Forumite
2 posts
edited 30 November -1 at 1:00AM in House Buying, Renting & Selling
Hi there I’m currently in the process of buying a house and will have 2 bedrooms spare and was wondering if I asked for my friends to move in with me and we split the mortgage, bills, council tax, boardband between the 3 of us, would I have to pay tax on the money they give me?
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  • SpidernickSpidernick Forumite
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    Probably not. Google ‘rent-a-room relief’.
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  • He should 100% would.

    You aren’t splitting the mortgage, it’s your mortgage and you are the owner.

    You can earn £7.5k tax free and after that it’s taxed along with your income.
  • zagubovzagubov Forumite
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    Can I just say, that, paradoxically, friends as lodgers need the firmest boundaries.

    Lay down sensible rules about visitors and guests, cleaning and washing up, noise and access to shared facilities, payment deadlines and notice needed to quit before they hand over money or move in.

    And don't just think "they're mates so no need for rules".

    Do read G_M's sticky.
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  • FreeBearFreeBear Forumite
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    Ryanbell94 wrote: »
    Hi there I’m currently in the process of buying a house and will have 2 bedrooms spare and was wondering if I asked for my friends to move in with me and we split the mortgage, bills, council tax, boardband between the 3 of us, would I have to pay tax on the money they give me?

    Work out how much the bills are likely to be and structure the rent to cover these and the mortgage. Do not "share the mortgage repayments" as this could grant your friends a beneficial interest in the property. Make sure the rooms are furnished, clear house rules are set from the beginning, and provide a written agreement - Make sure that this is a licence to occupy and not a tenancy agreement.

    As long as the annual income is below £7,500, you do not pay tax. However, you may be liable to some capital gains tax if/when you sell.
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  • zagubovzagubov Forumite
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    And no locks allowed on their doors.
    You can obviously put a lock on your own bedroom door, and probably should if you're away a lot.
    You need to arrange to enter their rooms to empty the bins.
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  • That lock thing is annoying.
  • SmodletSmodlet Forumite
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    That lock thing is annoying.

    Surely, less annoying than granting a lodger "exclusive occupation" of a room and, therefore, the same rights as a tenant, don't you think?
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  • Is this 7.5k for each room or both rooms?
  • edited 19 August 2019 at 9:51AM
    muhandismuhandis Forumite
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    edited 19 August 2019 at 9:51AM
    Total, for both rooms together.

    The tax exemption is automatic if you earn less than £7500. This means you don’t need to do anything.

    You must complete a tax return if you earn more than £7,500 for the tax year. On your self assessment tax return, you can then opt into the scheme and claim your tax-free allowance.

    https://www.gov.uk/rent-room-in-your-home/the-rent-a-room-scheme
    Ryanbell94 wrote: »
    Is this 7.5k for each room or both rooms?
  • sevenhillssevenhills Forumite
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    Ryanbell94 wrote: »
    Is this 7.5k for each room or both rooms?


    The Rent a Room Scheme lets you earn up to a threshold of £7,500 per year tax-free from letting out furnished accommodation in your home. This is halved if you share the income with your partner or someone else.


    https://www.gov.uk/rent-room-in-your-home/the-rent-a-room-scheme

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