Can I secretly rent my house to my son

[Pinkpanther111]

i am wanting to rent a bungalow. Instead of selling my house my son will pay rent to me.
can I do this without telling anyone?

TIA

Mumsnet is anonymous…

Only if he's over 60!

Dodging inheritance tax, I think.🤔

Ex-landlord here.

lots of legally required checks you need to do to ensure property is safe and to protect yourself if things go sour. Without the required documents a section 21 eviction notice will not stand up and you would need to wait for three months of rental arrears before you serve the other type of notice / go through the courts. Annual gas safety checks and boiler servicing, electrical safety, right to rent documents and checks.

secondly, tenancy agreement is an absolutely must - also to protect yourself in case of non payment of rent or similar

thirdly, tax implications. You would need to declare to HMRC for tax purposes, plus when you come to sell you may be liable for capital gain tax depending on increase on property value and time rented out. Bug fines and no lenience from HMRC if you are caught out. Plus tax threshold for landlords are increasing under new government and renting out property isn’t the cash cow people think it is and certainly not how it used to be.

I would see it all the time in landlord forums, people just like yourself would rent to family and it went horrible wrong, properties were trashed and thousands of pounds of repairs. And most say it started out with zero issues in the relationship.

proceed with caution and don’t dodge the tax. You’ll have to evidence income to be able to pass affordability checks anyway on your next rental.

Just FYI, you only have to do self assessment over a certain amount (I think £1000 per year profit). Below that, you can declare it online on the government gateway.

@ You most certainly will have to tell HMRC and - if appropriate to your circumstances - pay tax on any profit after taking off any legitimate expenses for which you have receipts!

why not make an informed comment, rather than what you "think"

Check if you need to send a Self Assessment tax return - GOV.UK

if not required to submit an SA then you do not declare anything on the "government gateway" since there would be no reason for you to be on it in the first place.

I am informed. I rent out property . If you make less than a certain amount, you can report profit from renting out property via government gateway, you do not need to do it as a self assessment. I do this myself - my tax code gets adjusted accordingly and I pay the tax through PAYE. Without knowing how much rent the OP is charging, I don’t know if they could do it this way or if they would have to do a self assessment.

maybe you need to be better informed?

provide a link confirming your "certain amount"????
in the meantime, read the govt link I gave

Can't your son do the rental payment for the bungalow and you live there, and you pay your mortgage as usual, and he lives there?

would still count as tax evasion since you are not allowed to offset an income against an expenditure. Having your rent paid for you is an income, mortgage payment on a property that is not legally let is no an allowable expenditure. Net result, all the rent payment would be taxable income.

I did read it - did you? If you follow it all the way through it tells you what I said (depending on your personal circumstances, income etc).

The reason I’m unsure on the amount is because I believe it changed in the budget and I’m not sure what the new limit is (unlikely to affect me, but I will check next year when the time comes).

Do it legally and with a contract yo protect everyone.

ok, yes if you have income between 1,000 - 2,500 you do not need to register for self assessment but must notify HMRC of the fact you have untaxed income so they can adjust your tax code

I would be surprised if many landlords have such a low income (£209 per month), bearing in mind you also have to declare if your expenses are >2,500

income refers to the gross amount received, not the net profit after expenses

😅
People who know what they're doing can find people really easily

I think you will end up in jail.

OP can charge whatever rent they like. But you’re right about declaring it.

You don’t need a solicitor but any rent he paid you would need to be declared in a tax return. Depending on other income and how much the rent is, you may not need to pay much tax though.

Tia
If this is a later life inheritance move, its often done, swapping houses your son needs more space you need less, we did this with my daughter. the ownership of the house stays with you and will be part of your estate in your will, if you have other children consider who has what in the will

If you are wanting to downsize, get your son to pay the rent on the bungalow directly to the landlord, technically it’s a gift ( no limit on gifts out of income), and wouldn’t need to be declared
If you allow him to occupy your house, as long as there is no mortgage that’s fine, you would not be able to gift the house if he’s paying rent for you ( gift with reservation)

You'll need to get Landlord house insurance in your name

you would deduct the expenses I.e. your rent to calculate any profit abd if profit under £1000 HMRC don’t need to know

that is FUNDAMENTALLY (dangerously) WRONG
you cannot offset your own living costs (rent paid for the place you live in) against income received for renting out a property you own but do not live in

@Wot23 i would assume expenses were repairs to the rental property.

that is not what the person said ... "deduct the expenses I.e. your rent "

you cannot deduct personal cost of living expenses (rent paid on the place you live in) from business income
(the latter, in this case, comprising rent received from letting a property)

… I had assumed you were going to sublet the place to your son so meant the rent you would have paid, if you’re buying the place then that’s different