Please help family and rent

[limeandwater]

Lurker of ten years plus, and looking for some anonymous and honest feedback.

Approx 5 years ago sister split from husband. On the surface they lived a very nice life, but long story short her ex had mortgaged everything against his business and they lost the lot and were left with nothing.

My husband and I are fortunate enough to have a number of properties. We let her and her two kids stay in one of our houses and used words to the affect "it's yours rent free for as long as you need it."

She met a man approx two years ago who we like and is good to her and the kids and 3 months ago she asked if he could move in. We said yes - but presumed rent would follow.

To give you some non specific info the man in question earns approx 60k per year and rents out the flat he was living in for £1600pcm which I imagine would more than cover his mortgage. They live a nice life if that matters. Holidays, meals out, etc.

We are in South East and the 3 bed house she lives in would rent at approx £2800 per month. My husband thinks its cheeky that no offer of rent has been made. He doesn't want or expect market value - and in fact would probably only want about half.

I agree with him, it's a bit cheeky, but then think back to our wording 5 years ago.

My husband is a lovely man and never gets angry, but last Sunday we went out for Sunday lunch and we split the bill. I could tell tell he was annoyed and asked him what was wrong - and he stated "he lives rent free in our property, he could have got lunch."

Who is right and what do we do?

Divorcee x2
Widow
Titled man's daughter
Inheritance

No earned income.

You really don't have to pay tax on rent money that you have not asked for or received.

My parents rent to us cheaply and they do their self assessment and pay tax based on what we pay. No requirement for tax to be paid as if a market rent is being received when it isn't.

With Capital gains tax on the sale of a property you do have to base that on the uplift in the value at market rate even if you give it away or sell it under value.

@SoMuchBadAdvice Up to now, they haven’t had a tenancy agreement stating X rent up to now, her sister was just living in the house.

From April 1, they’ll have a tenancy agreement stating £1750 pcm and they’ll pay the appropriate tax.

@limeandwater It sounds as if you and your DH are happy to support your sister by charging below-market rent from April 1. As long as you’re comfortable with the situation, that’s all that matters.

I know everything is resolved. I said so in the comment you quoted.

If you are renting out a property, even if you receive half rent, you will need to declare it for tax purposes. Out of interest, the reason I mentioned this is because if you rent it for less than market rate, then you can be asked to pay tax on what would be the full going rate regardless of whether you’ve charged it. So it can really bite you in the butt! Particularly at these numbers.

Actually, it would appear my comment above it out of date! Which is great news. It’s more to do with not claiming expenses. Glad you have a solution.

You need to communicate that you want rent. You specifically told her you didn’t want rent.

Happy its sorted

You are right and I am wrong. Sorry.

You are right and I am wrong. Sorry.

People have been wrong before - but never quite as wrong as you.

Hardly.

There has been a change in the law in the last decade that I wasn't aware of. I was right once upon a time, just not now. Forgive me, but you see a bit troll like.

I have been super polite and thankful to everybody who has posted.

However, I am going to stick up for myself when somebody accuses me of a criminal act. As I am sure you would.

...or with such an apt username.....

This is my problem with the situation - and I guess if it doesn't bother you then fair enough - but you are financially supporting her working part time.

If you want to do this because she is your sister and best friend then that's your look out, but don't shoot people down when they say she is taking advantage of you, because she is.

I would bet large sums of money that her and her partner had a conversation when you asked to meet along the lines of ' we've gotten away with it for a good amount of time, if she asks for anything less than £2k a month, snatch her hand off ' .

Perhaps.