[Misc] Legal help

[Herr Tubthumper]

I'm not sure I understand Herr. Can you elaborate please?

Sure. Letting agent management fees can be deducted as an expense from the rental income e.g. you get 100 in rent, your management fees are 10, these can be deducted so you only pay tax on 90 pounds.

My point is that with the set up you propose the person receiving the rent is not accountable for the management fees…contractually this is your overhead. So in theory they cannot then claim them as an expense. There are ways around this, you could for example have a separate agreement between you and your f***ing useless family members to supply management services which you in turn have “subcontracted” to the lettings agent.; it is something to be aware of but not insurmountable.

 

[Eric the meek]

This thread is about fingers in pies. The tenant pays the lettings agent a whole pie every month. The lettings agent takes his slice. The landlord keeps the rest of the pie and doesn't see why the taxman should take a further slice. So the landlord comes up with fiendishly cunning ways to try and keep hold of the rest of the pie. This includes roping in family members to pose as intermediaries.

What can possibly go wrong?

 

[essbee1]

Sure. Letting agent management fees can be deducted as an expense from the rental income e.g. you get 100 in rent, your management fees are 10, these can be deducted so you only pay tax on 90 pounds.

My point is that with the set up you propose the person receiving the rent is not accountable for the management fees…contractually this is your overhead. So in theory they cannot then claim them as an expense. There are ways around this, you could for example have a separate agreement between you and your f***ing useless family members to supply management services which you in turn have “subcontracted” to the lettings agent.; it is something to be aware of but not insurmountable.

Thanks very much Herr T.

 

[essbee1]

Dad died last year, mum is ill. Two useless brothers. I've been carrying everyone for the past
18 months and I'm just f****g tired of the whole situation. Sleepless nights - that
sort of thing. No attempt to defraud or evade.
I just want it sorted asap and sometimes doing things yourself is the only way.

There' always the Albion and NSC for my sanity.

 

[Zeberdi]

Thanks very much Herr T.

In a sentence- whoever is receiving the income from rental on a property is receiving income that is declarable and will have to pay tax (with expenses/exempting items deductible) however much it goes round the houses first and whoever owns the property.

BTW - if someone does own the property that is not their home ( eg an investment port folio) they will be liable for Capital Gains Tax of course if they sell it for a profit- Inheritance tax could also be payable if the property is over £325,000 (£500,000 threshold for family beneficiaries ) in the event it is gifted as part of the estate of a deceased owner)

 

[essbee1]

Thanks Zeberdi,

 

[Herr Tubthumper]

Dad died last year, mum is ill. Two useless brothers. I've been carrying everyone for the past
18 months and I'm just f****g tired of the whole situation. Sleepless nights - that
sort of thing. No attempt to defraud or evade.
I just want it sorted asap and sometimes doing things yourself is the only way.

There' always the Albion and NSC for my sanity.

Sorry to hear this essbee, and agree with the sentiment of 'doing things yourself.' Whilst I am not qualified to give financial or legal advice I do have some experience in this area which may be of use to you. Feel free to DM me if you need an opinion on something.

 

[essbee1]

Sorry to hear this essbee, and agree with the sentiment of 'doing things yourself.' Whilst I am not qualified to give financial or legal advice I do have some experience in this area which may be of use to you. Feel free to DM me if you need an opinion on something.

Thanks mate. Appreciated.

 

[Zeberdi]

Thanks Zeberdi,

I should add - rental monies are regarded as ‘income’ for tax purposes so if your overall taxable income for the year including rental falls under the taxable threshold - it’s tax free allowance!

 

[essbee1]

I should add - rental monies are regarded as ‘income’ for tax purposes so if your overall taxable income for the year including rental falls under the taxable threshold - it’s tax free allowance!

Ta again.

 

[Zeberdi]

Dad died last year, mum is ill. Two useless brothers. I've been carrying everyone for the past
18 months and I'm just f****g tired of the whole situation. Sleepless nights - that
sort of thing. No attempt to defraud or evade.
I just want it sorted asap and sometimes doing things yourself is the only way.

There' always the Albion and NSC for my sanity.

Really sorry to hear that - unfortunately it’s too often that one sibling ends up with all the load.

Many years ago myself and my siblings put our Grandparents house into a trust we set up for that purpose and the whole thing was managed by an accountant but it cost a set solicitor fee in the first instance to set up the trust fund and transfer deed for the property. The whole financial side of it was subsequently dealt with by an accountant for an annual fee including managing the income received by the rental. (We still had a management company for the actual property) - Years later when the property was sold, the trust was kept on for the benefit of great grandchildren.


Might be an idea to consult a qualified accountant and see if there’s an alternative to you having to manage all this yourself. It all depends really on what the rental value is whether anything like that would be viable but it can be a way of saving tax payments on rental income.

Putting a House In a Trust - Is It Worth it? - Nottingham Central

Thinking of putting a house in a trust? Find out whether putting property into a trust is a worthwhile investment in our guide. Read now.

www.belvoir.co.uk

 

[Eric the meek]

Dad died last year, mum is ill. Two useless brothers. I've been carrying everyone for the past
18 months and I'm just f****g tired of the whole situation. Sleepless nights - that
sort of thing. No attempt to defraud or evade.
I just want it sorted asap and sometimes doing things yourself is the only way.

There' always the Albion and NSC for my sanity.

Sorry I made light of your situation. I hope you get it sorted out really soon.

 

[essbee1]

Sorry I made light of your situation. I hope you get it sorted out really soon.

Eric - wasn't taken in any way like that. No need to apologise.

 

[Shropshire Seagull]

Unpleasant situation, I feel for you @essbee1 ...

Just to be clear, is the property a second home that was joint-owned by your parents and now that your father has died is 100% owned by your mother?

If this is the case, your mother should be receiving the rental income and this will be added to any other income she is in receipt of - pension(s) most probably - to fulfil the HMRC tax side.

I'm quickly coming round to the idea that this is a situation for Power of Attorney - you to have financial [and maybe health] control of your mother's affairs. Then, you can make these contracts in her name, but you sign them on her behalf with POA. You will then be able to deal with her self-assessment returns to HMRC as well.

If the property is still being lived in by your mother as her primary home, is she the owner or the tenant?

As @Zeberdi mentions, Capital Gains and Inheritance tax may come into play. Assuming the property is not where your mother lives [e.g. it's a second / investment home], unless there is a compelling reason to keep it [in the family / does someone depend on its income] I think I'd be inclined to dispose of the property now. This will most likely minimise CGT and depending on the value of the property and you mother's life expectancy, could also [legally] reduce / avoid IHT.

I feel there is more detail to uncover before clear options and way forward emerges.

Good luck, whatever you decide.

 

[essbee1]

Unpleasant situation, I feel for you @essbee1 ...

Just to be clear, is the property a second home that was joint-owned by your parents and now that your father has died is 100% owned by your mother?

If this is the case, your mother should be receiving the rental income and this will be added to any other income she is in receipt of - pension(s) most probably - to fulfil the HMRC tax side.

I'm quickly coming round to the idea that this is a situation for Power of Attorney - you to have financial [and maybe health] control of your mother's affairs. Then, you can make these contracts in her name, but you sign them on her behalf with POA. You will then be able to deal with her self-assessment returns to HMRC as well.

If the property is still being lived in by your mother as her primary home, is she the owner or the tenant?

As @Zeberdi mentions, Capital Gains and Inheritance tax may come into play. Assuming the property is not where your mother lives [e.g. it's a second / investment home], unless there is a compelling reason to keep it [in the family / does someone depend on its income] I think I'd be inclined to dispose of the property now. This will most likely minimise CGT and depending on the value of the property and you mother's life expectancy, could also [legally] reduce / avoid IHT.

I feel there is more detail to uncover before clear options and way forward emerges.

Good luck, whatever you decide.

Thanks Shropshire. We tried to sell, but got no real joy. We also owe a lot in loans on the place which was built by my Dad.