Tax implications when in carehome and renting out house to cover some costs

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    Tax implications when in carehome and renting out house to cover some costs

    My mother who suffers with dementia is now living in a carehome costing her around £3200 a month.
    She owns her house outright. If I rent her house out to offset some of the cost (rent about £1800 )are there any tax implications?
    Many thanks in advance for any replies
    Peter

    #2
    The annual income ( 12 x £1800 = £21600 ) minus the letting expenses ( letting agent, building insurance etc ) = annual profit will be taxed as income.

    If your mother has no job income, she can claim the personal allowance of £12,500 and pay 20% .

    For example, if the annual rent is £21,600 minus say £5,000 expenses , the annual profit = £16,600. After deducting £12,500 personal allowance , the taxable profit =£16,600 - £12,500 = £4,100.

    Tax will be charged at 20% = £820 .

    Comment


      #3
      But she cannot offset one against the other which is I think what you are asking. She will pay tax on the rental income above the threshold (assuming she has no other incomer)

      Comment


        #4
        Thank you both for your answers. it seems so unfair that at 93 and having never had any help from the state in her life that this is the case.
        In fact by paying for her own care she is saving the state money!

        Comment


          #5
          It is not unfair (or at least not any more unfair than taxation in general is unfair - which it is in large part). It is a source of income. It happens to be a house. It could just as easily have been a stockmarket investment, or ongoing royalties from her book.

          If I move out of my home to go an work elsewhere, I pay rent, but pay taxes on the rent I earn. So I end up substantially out of pocket. That's pretty unfair too I guess, and my rent paid is not a taxable expense.

          Comment


            #6
            Originally posted by Peter42 View Post
            In fact, by paying for her own care she is saving the state money!
            I hope that she is enjoying a better level of care as a consequence of her earlier prudence.
            When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
            Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

            Comment


              #7
              Originally posted by jpkeates View Post
              I hope that she is enjoying a better level of care as a consequence of her earlier prudence.
              Possibly, but that probably won't be the case now or going forward. People (like me) who spent sensibly, doesn't smoke, drink, doesn't eat out every day, doesn't go on fancy holidays a few times a year or drive two cars that are replaced every few years ... did that in the expectation of being less of a burden on the state and having a secure life. Now it seems likely that at least 50% of the value of savings are going to be eroded as a result of money printing, and basically state theft from exactly people like the OP. It is not the "government" who is providing the current handouts -- it is me.

              If it is to provide a safety net for vulnerable people (of which my child is one -- one of the reasons I have saved) -- I have no problem with that. But if it is to provide handouts to people who haven't given a stuff -- not so much.

              Comment

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