philmac Posted September 22, 2008 Report Share Posted September 22, 2008 I am currently buying a flat (perhaps at the wrong time!) and i intend to rent it to my daughter and her boyfriend. I believe the best way to do this is by an AST? if someone can confirm that. Should there be a clause included to say that if their relationship breaks down then the boyfriend has to move out? Also, as i am a non taxpayer and the rental will not exceed my personal allowance, do i have to inform the tax man, particularly, as my mortgage will be an 'interest only' and this could offset any gains. Just realised, flat will be in joint names, me and wife and she is a taxpayer, any advise please. Link to comment Share on other sites More sharing options...
Melboy Posted September 22, 2008 Report Share Posted September 22, 2008 Within reason you can add any clause you like to a AST Tenancy contract. The point will be if the Tenant accepts and signs your terms and conditions. To answer your question the answer is Yes. Unretrievable breakdown in their relationship will mean that the partner/boyfriend will be required to move out. yes, you will have to inform the IR taxman of your rental property and fill in the necessary documents which are straightforward enough. Mel. Link to comment Share on other sites More sharing options...
Preston Posted September 22, 2008 Report Share Posted September 22, 2008 Hi If I understand the situation correctly, it seems to me that you have three choices: 1) the first is to give them a joint assured shorthold tenancy. If you do this though, I am not aware of any legally enforceable tenancy agreement clause that will allow you (or your daughter) to evict her partner if they split up. Your only realistic option would be to allow the AST to come to an end, serve them with notice (jointly), evict him if necessary then grant a new tenancy to your daughter 2) grant an assured shorthold tenancy to your daughter in her sole name, that way, she can ask him to leave whenever she wishes - provided that is, they arent married or have any children. If either of the latter occur, particularly the first, he may be able to claim residency rights unless or until the tenancy is ended. 3) Dont give them a tenancy at all, but just grant your daughter a licence as a friendly "family arrangement". Whether you can do this in practice depends upon the precise circumstances of your case. The law says that unless there is a clear intention to create legal relationships between family members, then the starting presumption is that no such relations exist. And if there is no legal relationship, then there can be no tenancy. The advantage of such an arrangement is that you dont need to wait until the end of a fixed tenancy or give two months notice if you want either (or both of them) to leave. You simply have to give "reasonable" notice. However, its true to say that if they refuse to move out, you would still then need a court order before they could be legally evicted. For what its worth and for the sake of clarity for all concerned, I would go for option 2 if possible, but I would be interested to hear more if I've got the wrong end of the stick. As for tax, you will definitely need to fill in a return regardless of your current income - assuming they know about it of course. Preston Link to comment Share on other sites More sharing options...
philmac Posted September 22, 2008 Author Report Share Posted September 22, 2008 Thank you for your responses, much appreciated. However here is another question. I am remortgaging my main residence to buy the flat, i had paid the existing mortgage off a year ago. In this case therefore, i am not taking out a buy to let mortgage. If i were to be taxed on any income from renting the flat would i be able to offset the mortgage interest from remortgaging my main residence against this. Confusing, tell me about it! Link to comment Share on other sites More sharing options...
Preston Posted September 22, 2008 Report Share Posted September 22, 2008 Hi An interesting question and the answer is yes. The key, for tax purposes, is not the property against which the loan is secured, but the purpose for which it was obtained. So, even though the loan is secured against your own home, if you can show it was taken out for the purpose of buying a rented property, then the mortgage interest can be set off against tax. I havent found very many good guides to buy to let tax issues - I would be interested to hear from anyone who has - but one of the best I have seen is called "How to Avoid Property Tax" and is available on the Tax Cafe website. Preston. Link to comment Share on other sites More sharing options...
philmac Posted September 23, 2008 Author Report Share Posted September 23, 2008 Hi An interesting question and the answer is yes. The key, for tax purposes, is not the property against which the loan is secured, but the purpose for which it was obtained. So, even though the loan is secured against your own home, if you can show it was taken out for the purpose of buying a rented property, then the mortgage interest can be set off against tax. I havent found very many good guides to buy to let tax issues - I would be interested to hear from anyone who has - but one of the best I have seen is called "How to Avoid Property Tax" and is available on the Tax Cafe website. Preston. thank you Preston for all your advice, most appreciated. Link to comment Share on other sites More sharing options...
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