Renting to daughter

R

Red Helmet

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Hi,
My daughter and her partner want to live in a vacant house I own. It has become delapidated and needs new windows; new guttering ; boiler etc etc. I expect the cost will be 15 -20k. They are happy to cover some/all of these costs. Would it be better for me to pay these costs and so become allowable against CGT when I sell it which I would plan to do when they leave in 5-6 years and pay a small rent to cover the balance. I don't plan on any rent when the work is paid for( except possibly to cover lpt/insurance). I wouldn't intend to register with RTB as its family.
The garden front and back needs work-briars up against the backdoor; some trees that need removing -branches beating against one of the windows- is this clearance work allowed against CGT or against income tax under maintenance.? Is there a problem with claiming against income tax if it isn't registered with the RTB.?
 
The key issue is that you reach a written agreement with them.

If they split up in the next 5 years he could certainly claim a tenancy and at a very low rent which you would not be allowed to increase.

And if they both leave, no investor will buy it as it will have been at a below market rent.


It seems to me that you should enter into a formal letting agreement with your daughter and if she chooses to have a tenant that gives you some protection.

You should charge full market rent. And probably even more than full market rent. If she doesn't pay it, you won't have to pay tax on it.

Brendan
 
Red Helmet said:
It has become delapidated and needs new windows; new guttering ; boiler etc etc. I expect the cost will be 15 -20k.
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That's sounds extremely optimistic at today's prices for all that work!
Red Helmet said:
They are happy to cover some/all of these costs. Would it be better for me to pay these costs and so become allowable against CGT when I sell it which I would plan to do when they leave in 5-6 years and pay a small rent to cover the balance.
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There are bigger issues than CGT, namely the potential that other people spend money on your property and then fall out with you.

Far simpler if you pay for the works yourself and then charge them rent.
 
Brendan Burgess said:
It seems to me that you should enter into a formal letting agreement with your daughter and if she chooses to have a tenant that gives you some protection.

You should charge full market rent. And probably even more than full market rent. If she doesn't pay it, you won't have to pay tax on it.
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Hi Brendan,.

Is a licence agreement not a wiser option here?

I'm not sure your final line about tax on the rent is correct. All I see are high tax bills on the rent and gift tax implications for the inhabitants.

The OP clearly needs legal advice.
 
I agree best to have a basic lease agreement in place.

@Brendan Burgess is right. People break up all the time and this situation could get awkward if both daughter and partner are tenants. One option is to sign the lease with the daughter alone. Partner is then de facto her guest and he is a licensee rather than a tenant.

Landlord then has no contractual relationship or obligation towards the partner, only the daughter.
 
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