Cookie policy
Follow this topicFollow this topic Q&A » Renting your home

Who is liable for the tax on rent?

Zittzy
by Zittzy 10 May 2012  |  Comments 3 comments  |  Love Love  0 loves

X paid off daughters mortgage with the proviso that when the property was sold the money would be returned. As the property market has slowed down selling at present doesn't seem the best option so X and her daughter are considering renting it out until they can sell at a price that will cover the loan,but they are not sure,for tax purposes, whose bank account the rent money should be paid into. The deeds of the property are in the daughters name ,but the equity belongs to X.

Report

Enjoyed this? Show it some love

Twitter
General

Comments (3)

  • MikeGG1
    Love rating 878
    MikeGG1 posted

    First of all, consider the decision to let very carefully. Interest rates are expected to rise eventually and that could cause values to fall.

    Capital Gains Tax could become an issue if the renting goes on for more than 3 years.

    If they do decide to rent, it would be best for them to have a formal agreement as to the proportion each holds. Either that or make a formal transfer of the appropriate portion. Then each would receive their share of the rent and be liable for the same share of tax and expenses.

    The proportion could be determined by the the cash injection divided by the valuation of the property on the basis of a reasonable expectation, rather than an initial marketing price.

    Mike

    Posted on 10 May 2012 | Love Love  0 loves Report
  • JoeEasedale
    Love rating 174
    JoeEasedale posted

    In addition, renting a house is like running a small business. Accounts need to be kept. Expenses recorded and profit extracted. Tax is payable on the profit gained from renting the property, not on the rent.

    Consider carefully also the concept that property is vastly overpriced and that fair value could fall to around 50% of the price the property reached at the top of the market. This might not happen of course, but if it does..................................................

    Posted on 11 May 2012 | Love Love  0 loves Report
  • Zittzy
    Love rating 0
    Zittzy posted

    Thankyou both MikeGG1 and JoeEasdale for your responses they were both very helpful.

    Zittzy

    Posted on 11 May 2012 | Love Love  0 loves Report

Post an answer

Sign in or register to post an answer.

Something you're dying to ask... or answer?

Register with lovemoney.com to start asking and answering questions on Q&A.

Get started now

Sign in for a better Q&A

Registered already? Great! You can just sign in to ask and answer questions.

Sign in
W3C  Thank you for using CGWEBLIV4