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TaxRobin, Tax Consultant
Category: Tax
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Experience:  International tax
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Hi I am buying a house in joint names with my husband. The

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Hi I am buying a house in joint names with my husband. The house will be lived in by my son and two lodgers and set up accordingly with a short hold tenancy agreement. My son will be putting his savings into the purchase of the property and My husband and I will be putting up the rest of the money in cash. Instead of paying rent, my son intends to pay an equivalent (to rent) monthly sum to us which we will use to offset the money we have put into the property. The other two lodgers will pay me (a non tax payer) rent into my own account, which be solely my income, as I will be managing the property. I will of course pay tax on anything over and above the threshold. My son's contribution to the overall purchase price of the property is approx 10% with us paying the remainder. The eventual outcome of this purchase will be that my son buys us out when he can afford to at the price we are paying for it now, and he will also realise any growth on the current purchase price. I would like to know a) if the money that my son pays us monthly to reduce the amount of money we have, to all intents and purposes, lent him, is liable to me paying tax on it, bearing in mind it has already had tax paid on it and b) whether even though the house will be owned jointly in mine and my husbands name (this is to protect us all from un foreseeable events) I can claim the income solely for myself. C) if the answer to b) is no, can my husband's tax liability be reduced to the minimum with him only owning a tiny proportion of the property, with myself as the main percentage owner, under the joint tenants in common ownership agreement.
No your son will not be paying rent to you on the amount he is paying you. He is a part owner of the property.
You can split the rental income by percentage of ownership but your son is living in his portion so he would not be included in any splitting of income.
You must ensure that the share of the profit or loss shown on the tax return is divided between the owners according to their share of
the property unless a different division has been agreed between you. Your agreement is that your son is living in his portion and you and your husband will split or you claim all. When the individuals are married or in a civil partnership, the profit or loss is split 50/50
unless an election is made for their share to match the share of the property they each own or the property is a furnished holiday let.
Unless you have a larger percentage of ownership you will need to split this with your husband 50/50.
I sincerely ***** ***** information is helpful but it appears you have a;ready a very good understanding of your requirements.
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Customer: replied 3 years ago.
Hello sorry I thought I had made the ownership clear. My son will not be an owner of this property at this stage from a legal perspective, ie on the deeds. He will be putting in his savings, but will not be featuring in the ownership at this stage, for all of our protection ,ie dodgy tenants, girlfriends, etc. it is just that he will starting to pay us back the money we have put in, so that when he comes to,buy us out, he will have more equity in the property and we will have some of our cash back. Is this monthly repayment liable to tax on mine and my husband's behalf if he is not featured in the ownership? Are you also saying that my husband and I need to own very unequal portions with my owning the much greater share as a non tax payer (my husband pays 40%)?
If your son is not going to have an ownership interest in the property then his payments to you would be rent.
The only difference in this would be if you were to charge him less than market rate.
Of course if you were to charge him less you would need to apportion his rented space from the others and that would lower deduction for expenses.
"Are you also saying that my husband and I need to own very unequal portions with my owning the much greater share as a non tax payer (my husband pays 40%)?"
I am saying that you and your husband may split the % with you having more but you would do that based on your ownership interest yes. If your husband is 40% owner then he would claim 40% income. If he is 10% then he would follow the same.