# Renting to family member



## westside (1 Dec 2005)

Can anyone confirm if there is no need to register with the PRTB if I rent a property to a family member. I am sure I read this somewhere but cannot find anything on the PRTB web site

Are there any other benefits?


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## brigade (2 Dec 2005)

*Below is from the Oasis website:
I think the second last point may be of use.


The Residential Tenancies Act 2004 deals with the regulation of the mainstream private rented housing sector. It does not apply to certain kinds of rented properties:

Business lettings.
Holiday lettings.
Formerly rent-controlled dwellings or long occupation lease tenancies – separate legislation applies to them.
Owner-occupied accommodation (e.g. if you live in a house with your landlord or if you rent a flat in your landlord’s house).
Dwellings in which the spouse, parent or child of the landlord lives. This applies to informal family arrangements where there is no tenancy agreement in writing. Formal agreements between the family members e.g. where a lease has been signed are covered by the Act.
Social housing (e.g. Local authority and housing association tenants).
 *


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## Purple (2 Dec 2005)

It is always advisable to have a lease agreement and if you do have one you have to register with the PRTB (as outlines by brigade).


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## rayman (2 Dec 2005)

How is renting to a family member treated for tax purposes?
Say you rent an app to 1 family member for free and 2 paying friends.
The total income is less than the interest on RIP loan so is it simply a case of no tax due?


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## Purple (5 Dec 2005)

If that is the case then there is no tax due but you still have to make a return.


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## Kitty Kat (5 Dec 2005)

Just a point on the tax implication on the Rent Free issue.  The person receiving the property rent free is liable annually under Gift Tax as having received a gift annually of the open market value of the rent free accommodation.  The value is taken as the "best price" available on the open market so unfortunately an unrealistic rent cannot be assumed and the applicable date of reciept of gift is the end of the year or last point in the year that they availed of this.  Additionally, where the lack of rent creates a loss, this loss cannot be offset against other rent or carried forward as would be in normal circumstances.


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## rayman (5 Dec 2005)

Thanks Kitty Kat.
How can you expect a rent from a family member without an income, unless you were to give them the rent as income in the first place or maybe make a covenent with them?
Is there a source of information on this type of arrangment from revenue?


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## Kitty Kat (6 Dec 2005)

You could apply that this causes undue hardship but this only generally defers tax not abolishes it and generally would not apply on an annual case but never say never.  No sourse of information for providing accommodation rent free to relative who have no income, however if the relative is considered a dependant relative there is no problem.  There might however be an issue if part of the premises is being let to others and the dependant relative only occupies the other element, really would need to read the exact leglisation on this matter if that was the case.


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## Trustmeh (6 Dec 2005)

interesting thread.

How about this situation :
Parents age prevented getting a mortgage.  Son purchases house in his name, gets mortgage in his name, parents pay mortgage from their money.

Is this house considered renting?  The situation is entirely caused by the age of the parents and in no way is used to save money on tax.  is there a tax obligation by the landlord (son) ?


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## brigade (6 Dec 2005)

Yes, there is a tax obligation. Basically you are still renting and earning an income from renting. You are allowed the same deductions as when renting to anyone else, mortgage interest etc..
Revenue will still require you to file a tax return.


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## Full-Back (7 Dec 2005)

Hi all,

I just joined the forum and I am interested in the comments made concerning 'renting to a relative'. In particular, your comments 'Kitty-Kat'.
I was hoping for advice on the following:

My brother currently resides in a property in which I own 33%. He lives alone. My two sisters own the other 66% (33% each).

I wish to pass on my 33% to my son, but I want to know if I can avoid the disposal tax on this. My approach is that he is a dependent relative, who has an infirmity ( mental instability) and thus I can claim full-relief. On thing I want to check is that my brother is still alive, and I wish to pass the property this year. Is this possible? Anyone any advice on this?

Regards and thanks,

Full-Back.


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## Kitty Kat (7 Dec 2005)

If you are claiming that your brother is a dependant relative of yours and you as claiming as such, you should have no disposal taxes as the property is considered as being your PPR so no disposal tax, I am assuming that you mean CGT, as I don't believe that the legislation disqualifies it because it is not fully owned by you and also that it is not solely occupied by your brother.  The leglisation from memory only states that it must be the dependants relatives sole residency.  

Question now arises is, do you still intend to retain your brother in the property after passing to your son.  And could he be considered a dependant relative of you son?  Need to think about this a bit more.


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## Kitty Kat (7 Dec 2005)

On thinking about this a bit more, I beleive your brother could be considered a dependant relative of your son as the leglisation only specifies "relative" and for the purpose of exemption to CGT the ability to have this type of releif is not means tested as is with the Dependant Relative Credit.  In addition, for this purpose of this relief, there is no obligation to contribute towards any other upkeep apart from providing them with free accommodation.


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## Trustmeh (22 Dec 2005)

brigade said:
			
		

> Yes, there is a tax obligation. Basically you are still renting and earning an income from renting. You are allowed the same deductions as when renting to anyone else, mortgage interest etc..
> Revenue will still require you to file a tax return.


 
Got some advice offline about this and it seems consulting a solicitor is the next step.  It only makes sense that I can structure this in some way as to have no liability - at the end of the day its their family home.  Revenue arent that mean.


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## brigade (4 Jan 2006)

yanklink,
How did this go for you?
Did revenue give you any advice?


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## Trustmeh (4 Jan 2006)

I asked a tax adviser, and he said to get a solicitor to draw up a document that states that the parents are the benefactors of any income (rent or sale) of the home...he said it was common; someone pays for a house, but someone else "owns" it.  Like a lottery winner buying a house for a sibling/brother/parent etc.


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