Rent 2 Rent Tax Return

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    Rent 2 Rent Tax Return

    Hi,

    I'm currently receiving the rental income for my dads properties. I'm currently fully managing the properties for him and the tenants are paying the rent into my account. Once I receive the rent, I pay my dad a fixed amount and I keep the rest. Is this legal? And if so, do I pay tax on the full amount paid into my account or after deductions.

    Thanks

    #2
    It's legal.

    If you're named as the landlord on the tenancy agreements, your business is rent to rent.
    The amount you pay your father is a business expense, so you'll end up paying tax on the profit, but you need to declare the full amount as income and the payment to your father as a cost.

    If your father is named as the landlord, you're his agent (and the income is his and you're taking a fee).
    In that case the amount you don't pass on is all income and that's what you declare as the income for your business.
    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


      #3
      This is really helpful. My dad has changed the tenancy agreement and named me as landlord, so all payments are made to me. Therefore, all I need to do is declare all the income in the year as income and any payments to my dad, as expenses?

      Also, does this need to be in writing. At the moment the amounts I pay my dad have been agreed verbally.

      Comment


        #4
        Originally posted by dhoops97 View Post
        Therefore, all I need to do is declare all the income in the year as income and any payments to my dad, as expenses?
        Yes - that's essentially it.

        You should contact HMRC and tell them that you have a new source of income as a landlord and they'll tell you how they want you to report the income (probably an annual self assessment tax return).
        In a couple of years you'll need to do quarterly returns online (in line with everyone else) as they roll out a digital tax initiative.

        Also, does this need to be in writing. At the moment the amounts I pay my dad have been agreed verbally.
        It doesn't need to be in writing, but it's always helpful if something goes wrong.
        Doesn't have to be a huge legal document either, but it's worthwhile considering in normal English stuff like what happens if your tenant doesn't pay rent, does your father still expect you to pay him.
        And who pays for repairs - a new boiler could be a big outgoing for one of you.

        The older your father is the more useful this will be (and the same if you're not an only child).

        And, for everyone's sake, make sure you have the basic idea of what you're doing.
        Being a landlord is easy when everything is going fine, the rent's being paid each month and you're just dealing with the odd bit of maintenance, but when things go wrong and if you don't know what you're doing, it can feel like the hardest job imaginable.

        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


          #5
          Hi,

          Further to my question, when filling out the self assessment, do I need to attach a bank statement showing the income and expense (payment to my dad, the owner) or can I just input the amounts

          Comment


            #6
            Also, the money that you pay the owner (my dad), what is this classed as on the Self assessment (in terms of business expenses)

            Comment


              #7
              Originally posted by dhoops97 View Post
              Further to my question, when filling out the self assessment, do I need to attach a bank statement showing the income and expense (payment to my dad, the owner) or can I just input the amounts
              The tax return is simply a summary, you don’t need to supply anything to back it up unless you’re asked to.

              Don’t forget that your costs are income for your father which he has to declare in turn.

              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


                #8
                Thank you! The income for my father, what category of business expense is that for me? Does it go under rent, rates for example?

                Comment

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