Sharing mortgage if 2nd owner not living in house

S

sineaddelany

Guest
I am interested in buying a property with my sister. Neither of us are in a position to buy individually. As she works and rents in Dublin and we are buying a property down the country, she does not intend to live in the house. I will be living in the house. I am looking for reccommendations on how to split the mortgage. Should we go for 50/50 or should we divide the house on room by room basis for rent purposes, and the shortfall split between us. Has anyone been in a similar situation?
 
sineaddelany said:
I am interested in buying a property with my sister. Neither of us are in a position to buy individually. As she works and rents in Dublin and we are buying a property down the country, she does not intend to live in the house. I will be living in the house. I am looking for reccommendations on how to split the mortgage. Should we go for 50/50 or should we divide the house on room by room basis for rent purposes, and the shortfall split between us. Has anyone been in a similar situation?
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yours : (total mortgage - fair rent) / 2
hers: ((total mortgage - fair rent) / 2) + fair rent
 
Myself and my brother are in this situation and we have bought a house that will be ready next March. I will live there and he won't so I will rent out his share. We are doing it 50/50 and any furnishings will be mine.

The thing to be careful of which your solictor will talk you through is that your sister will have to pay capital gains tax when you sell the property as the rental for her part of the mortgage is seen as income but for my brother he isn't putting any money into the house so this doesn't bother him!
 
The non owner occupier co-owner will presumably pay stamp duty on the purchase the and joint buyers will also be classed as non FTBs as far as I know.
 
JJJ said:
Myself and my brother are in this situation and we have bought a house that will be ready next March. I will live there and he won't so I will rent out his share. We are doing it 50/50 and any furnishings will be mine.

The thing to be careful of which your solictor will talk you through is that your sister will have to pay capital gains tax when you sell the property as the rental for her part of the mortgage is seen as income but for my brother he isn't putting any money into the house so this doesn't bother him!
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i don't think your right... Just because your brother doesn't live there doesn't mean that you covering 'his' portion of the mortgage is 'rent'... you're merely 'helping' him out.

Pretend you were a married couple. Both husband and wife have a mortgage on the place. Husband doesn't live there (for whatever reason), and is renting somewhere else - but his wife decides to pay full mortgage... this doesn't mean that he is liable for Income Tax. Just because you are being more 'generous' in paying the mortgage doesn't mean your brother is liable for income tax due to your 'generosity'... unless of course you are claiming some form of rent relief... but that shouldn't be possible if you effectively OWN the house that you want to rent. If you were renting part of the house to an OUTSIDER then you AND your brother would be liable for income tax (assuming that your income is greater than rent-a-room scheme amount).

-soc
 
The house bought between us will be my principal residence and my brother is staying at home with our parents. In order to pay the mortgage I will be renting out a room (and getting rent relief)to cover my brother's share of the mortgage. As far as I understood from our solicitor when we sell the property my brother will have to pay capital gains tax as the property will not be his principal residence. He will also then not be a first time buyer for any future property he purchases.
 
JJJ said:
In order to pay the mortgage I will be renting out a room (and getting rent relief)to cover my brother's share of the mortgage.
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Will you personally would be renting the room? Or renting out to someone else? If you are referring to yourself... then you CAN'T qualify for rent relief, as you OWN the house, and thus are the LANDLORD. Bear in mind you AREN'T renting an 'extra' room... you're merely living in the house, but making a larger contribution to the mortgage.

If the house isn't your bro's PPR, then yes, HE is liable for CGT on his portion of property, but he is not liable for income tax if you co-own the property with him, and are the sole occupant of the house. If you rented a room to an outsider, then both he and you would be liable for income tax (assuming rent taken in is above the threshold for rent-a-room scheme)

-soc
 
Of course I mean I am renting out a room to a stranger? How else would I think that I could get rent relief?
 
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