I may have to rent out my house and rent another one closer to my mother. Will the rent I receive be liable for tax and, if so, can I offset it against the rent I pay on the new property?
You will not be able to offset tax against the cost of your own rent as this is a private expense, but other forms of tax relief are available such as maintenance and repairs (but not improvements) to your home, any mortgage interest as well as council tax, home insurance and lettings agent fees. If you have a mortgage, you should inform your lender that you are renting out your home, though this may result in an increase in the interest rate you pay.I own a three-bed terraced house. Some years ago, when our next-door neighbour wanted to build a run-in for his car, my husband offered a corner of our front garden. In return, the neighbour paid to move the existing hedge and build a brick wall around our remaining garden. It was only a verbal agreement and was not recorded on the property deeds. Now I want to sell the house – how should I get this settled?
The first thing you will need to do is advise your solicitor, as he can advise on how best to present the situation. Although you did not contractually ‘give’ the land to the neighbour, your arrangement ‘granted’ them access rights on which they have come to rely.
This may have been a personal right, which falls away on sale, or it may attach to the land by way of a prescriptive right, depending on how long the agreement has been in place. This itself carries legal weight and, if you end up in court, expenses could outweigh the added value (if any) to your property. It is important to seek legal advice on the matter and, if you have Saga Home Insurance
, the legal advice line
may be able to deal with it free of charge for you – 0845 366 1100.
However, if relations are good, you may be able to put the agreement in writing and/or both parties amend their deeds to reflect the current situation.My mother gave me her flat 17 years ago but continues to live in it and has not paid me any rent. Her total estate will be less than £325,000 so there would be no Inheritance Tax (IHT) to pay when she dies, but would I be liable for Capital Gains Tax (CGT) when the property is sold?
This will depend mainly on the intention at the time the gift was made. If the property was an outright gift then, unless you yourself lived in it as your main residence, you would have to pay CGT. This would be calculated on any net gain (over and above your individual CGT annual exemption of £10,600) between the time the flat was given to you and the time it was sold.
Any net gain is taxed at 18%, so long as your income and gains are within the basic rate tax band. Any amount above that is taxed at 28%.
However, if the gift was made on the understanding that your mother could continue to live there (and you can prove this), then ‘principal private residence relief’ would apply and exempt the gain for the period in which your mother occupies the flat.
Bear in mind that the flat will need to be included in your mother’s estate for IHT purposes.Everybody's clicking for a new home...
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