Rental income query

B

Bonaparte

Registered User
Messages
96
If one moves out of the family home but a son or daughter remains and pays rent to the parents to cover morgtage payments, is this considered to be rental income and do the parents have a tax liability
 
Good question, but I think once you move out of the Family home, and it is no longer your Principle Private Residence PPR (presumably you're living fulltime somewhere else) then it is then considered an investment property. There is no such thing as the Family home from a taxation point of view, only your PPR.

However in most cases Revenue do not consider rent received from a close relative to be rent (child cannot claim rental relief; someone going abroad can rent their house to a close relative and retain it as their PPR)

My opinion would be the house would be considered an Investment property, but the income from the child would not be considered Rental Income. So not tax would be liable on the income, the house would be liable for CGT purposes after 12 months, and the child would not be able to claim rental relief.
 
No ,as long as you don't go over the Rent-a-Room relief limit. For 2007 I think it is around 7000 per annum(you will need to check this on revenue.ie). You can earn up to this limit tax free. if you go over this limit the whole amount is taxable. It does not matter that your son or daughter is paying the rent.
 
Howitzer said:
However in most cases Revenue do not consider rent received from a close relative to be rent (child cannot claim rental relief; someone going abroad can rent their house to a close relative and retain it as their PPR)

My opinion would be the house would be considered an Investment property, but the income from the child would not be considered Rental Income. So not tax would be liable on the income, the house would be liable for CGT purposes after 12 months, and the child would not be able to claim rental relief.
Click to expand...
Any chance you could link to authoritive information (e.g. on Revenue.ie) on this point?
 
the original post is an income tax query, not a CGT query so I wouldnt get into the CGT side of it.

yes Rent-a-Room relief applies to owner occupiers in their PPR....i am assuming this is the set up of the original pposter
 
But (a) the original poster may not have realised that there could be CGT implications so mentioning them is prudent and (b) the original poster spoke of moving out of the property so it's not clear if the PPR status is retained. In short - too little information to draw any definite conclusions.
 
the whole scheme was designed to help people with mortgages so the fact that the owner occupier is not living in the house is irrelevant...as long as its their PPR. ive checked the legislation, there are no provisions stating you must be occupying the house to claim this relief. merely states its one PPR
 
This makes no sense to me - your PPR is the property in which you normally reside and an owner occupier is just that (i.e. owns and lives in said property). While there are some exceptions (e.g. being seconded abroad in work etc.) allowing you to retain PPR status while not living the norm is for one to live in a PPR.

[broken link removed]:
WHAT AT ANY TIME IS AN INDIVIDUAL’S PRINCIPAL PRIVATE RESIDENCE?

 An individual’s principal private residence at any time is the building or part of a building occupied by the individual as his or her only or main residence: during the period of 12 months ending with that time, or where the building was more recently acquired, from the time of acquisition to that time.
An individual is treated as occupying a building as his or her only or main residence even where the terms of a persons employment require that he or she absent themselves from the building so long as both before and after any such period of absence the individual actually occupies the building as his or her only or main residence.
Click to expand...
If you can cite rules/legislation that state that one can retain PPR status while not living in the property other than in the circumstances alluded to above then please do so.
 
ClubMan said:
Any chance you could link to authoritive information (e.g. on Revenue.ie) on this point?
Click to expand...

Not really, it's a grey area but one which was clarified somewhat by the last budget whereby children could no longer claim rental relief for rent they'd paid their parents whilst living at home. There was a pretty good thread in the Budget 2006 section but that appears to be gone now. If a child cannot claim rental relief then the "rent" isn't considered rental income and so isn't taxable.

Brenno123, you're on a losing arguement there.
 
apologies Clubman, you are right, i wasnt aware of the strict definition for PPR and now I can see how it all links in the legislation. sorry original poster for any confusion.

clubman is right. would need to know you exact circumstance to make a call. u away with work etc. do u still have the ppr status as clubman suggests.
 
Howitzer said:
Not really, it's a grey area but one which was clarified somewhat by the last budget whereby children could no longer claim rental relief for rent they'd paid their parents whilst living at home. There was a pretty good thread in the Budget 2006 section but that appears to be gone now. If a child cannot claim rental relief then the "rent" isn't considered rental income and so isn't taxable.
Click to expand...
Thanks - I remember that thread alright but cannot find it either right now.
 
You must log in or register to reply here.
Back
Top