How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask TaxRobin Your Own Question
TaxRobin, Tax Consultant
Category: Tax
Satisfied Customers: 17633
Experience:  International tax
Type Your Tax Question Here...
TaxRobin is online now

I co-own a flat with mum who lives overseas, after being my

This answer was rated:

I co-own a flat with mum who lives overseas, after being my main residence for 8 yrs (bought 10yrs ago) I am buying a new flat with husband and renting existing flat out. How will the rental profits be taxed? I deal with the admin since its easier but profits go to her uk bank acc and mortgage also pay from her account, tenancy agreement have both our names on. Also I know there is tax relief when I sell in the future, does it mean if I sell within 3 yrs of renting it out I will not have to pay capital gain tax? And is it always more advantageous to have 2 names rather than 1 when selling flat from tax point of view? Thanks
You and your mum would split the income and expenses of letting based on your ownership interest in the flat.
You don't usually have to pay Capital Gains Tax when you sell or dispose of your own home. This is because you get a relief called Private Residence Relief. You may have to pay Capital Gains Tax if you own more than one home or you use your home for business purposes (example letting).
You may not get the private relief but you would be allowed letting relief if sold. The maximum amount of Letting Relief due is the lower of:
the amount of Private Residence Relief due
the amount of gain you've made on the let part of the property
The above of course is just on your portion of gain at sell.
Customer: replied 3 years ago.

So it doesnt matter whose bank account the rental profits go to or who is dealing with the admin in the rental business or whose name is ***** ***** tenancy agreement, the rental profit will still be taxed equally between me & my mum? If rental profits go to her bank account i am not sure how i will be taxed...and I guess her tax rate will be 20% as she doesnt live in the uk? If I sell this flat within 3 yrs I would get PPR no? As I used to live there and only letting it for 3yrs. Thx

The tax would be split between the two of you because you each own the property. If you own it equally then you will split 50/50. What ever your ownership interest is in the property is your splitting percentage.
If you sell within 2 years you do not get to claim the PPR for the time you are not using as your main residence. You will need to apportion between letting and personal for the gain.
Then you can use the PPR and the Letting Relief on the separate amounts.
Customer: replied 3 years ago.

Hi I read on hmrc PIM1030 website that in absence of a partnership that joint owners can agree on a different share on the rental profit and loss, it doesnt have to be 50/50? In this case we agreed my mum will pay mortgage and receive rent profits so she should be taxed 100% right? I dont quite understand what will i be taxed on if i dont get the income...?


Yes, owners can agree a different division of profits and losses and so occasionally the share of the profits or losses will be different from the share in the property.
The mortgage is being paid from the income. If you are having your portion of the mortgage paid from the income then you are receiving income (even if the income is used for payments).
Is this mortgage is not your debt too then showing all for your mother would be fine.
Customer: replied 3 years ago.

Thanks just to clarify, if net income is £1,800, interest on mortgage £800 so net profit £1k, even if all mortgages & income go to her account, I will be taxed on £400* say 40% tax rate (since i didnt have to pay 50% of mortgage interest )and she will be taxed £600* 20% basic tax rate?

You would need to report your portion of the rental and then your portion of the expenses (which yes, reduce your income).
If you are each half owners then you are correct in your clarifying statement.
Customer: replied 3 years ago.

Thanks, ***** ***** isnt really a tax advantage to have profits to go to her account then?

No unfortunately that would not change your reporting.
TaxRobin and other Tax Specialists are ready to help you