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  • Tax

    Landlord tax liability - do not receive rent?

    Evening - I’m hoping someone may be able to provide some clarity on a taxation matter.

    I inherited a BTL property from my late mother although have an unwritten agreement with my father that he will receive all the rental income (which he did whilst my mother was alive).

    My father declares the income from this property through a tax return but with me being the landlord am I still technically liable for the tax here despite not receiving the rental income?

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    Hi Jonny,

    You are not collecting rent into your account, therefore you are acting more like an agent than a landlord. You are not liable for any tax as you have not received any income.

    Should HMRC ever question you, your bank account will show that you never received any rental income, so there is no tax due.

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    Thanks Vanessa. I’ve been told by a mortgage lender that they wish to see this documented by an accountant as they think I may have a large outstanding tax liability but your statement backs up my own thoughts

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    That is no surprise. You can get a tax document from revenue stating all your taxes are paid up to date. - can't remember what it is called. That should cover the question your mortgage company has. Just done this myself.

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    Not sure it’s as simple as showing no money entering your account. Imagine the fraud that would be possible if that were the case!

    is there a tenancy agreement? Does it statevthe monthly rent? If so, who’s name is down as the landlord and owner of the property? That will be who HMRC chase for their tax.

    otherwise anyone could just redirect all their rental income via a friend / family member and avoid S24 completely. Only to be given the cash in hand at a later date.

    btw. Anyone checked the P118 site? A few disparaging remarks from a certain someone about the property tribes site. Over on the “tenant tax” billboards page.

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    I own the property but it is my dads name on tenancy agreement. I have no dealings with he property at all and for all intents and purposes my dad is the landlord albeit I own the property.

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    Have you lodged any kind of official assignment of beneficial interest? I suspect that this could get tricky unless there’s something in writing? You’ll need to speak to a tax advisor.

    also might be worth checking if your dad can be the named landlord on a property he does not own without any other paperwork assigning him that right. Assuming there is no formal agreement in place?

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    a verbal agreement is - for most types of legal agreement - just as valid as a "formal written agreement".

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    Not if you have to provide evidence to HMRC if they call you in for a tax investigation.

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    Also, if you are the legal owner, how can your dad take out the various insurance policies etc that you would want? Have you taken out buildings insurance for example, and does your insurer know the property is let?

    if something were do go wrong with the property, who is legally responsible?

    Who is responsible for protecting your tenants deposit, and who would would have to execute proceedings for an eviction?

    does your father rent the property from you, and then re-let? (Let to let) ? Do you have paperwork to prove this arrangement is in place?

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    Some interesting points you have raised here that I will need to clarify - thanks for the post

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