Sign up to get our free landlord tax strategies

To receive our seven FREE landlord tax saving strategies just simply complete the form below and the first strategy will be emailed to you immediately.

Sign up to get our free landlord tax strategies

Thank You!

Seven FREE property tax busting strategies reveal the secrets of how to legitimately beat the taxman and boost your property profits!
View All Questions

Do I Pay Tax on Rent Received from Family?

I am considering renting out my inherited home that I currently live in alone to my brother and his family (wife and 2 kids) for 1-2 years, and subsequently rent a flat up in London for that time.  If the 'rent' I charge my brother covers the mortgage and the normal running costs of the house, do I pay tax on that as income? There would be no profit as the agreed 'rent' is to cover the mortgage and pay for all required utilities, council tax and home insurance.

Arthur Weller Replies:
Interest on the mortgage is an allowable expense because it is always the responsibility of the landlord. If the rental agreement between yourself (the landlord) and your brother (the tenant) says clearly that the landlord is responsible for the home insurance, the council tax and the required utilities, then the rental payment covers these expenses, and they are all allowable expenses. They can therefore be deducted from the gross rental receipts in order to calculate the net rental receipt on which tax is calculated. If this net amount is nil, then there is no tax to pay. This can be seen in the HMRC Property Income Manual, at pages PIM2030, PIM2040 and PIM2076: 

Property Tax Insider This sample question and answer is taken from Property Tax Insider, a monthly UK tax saving magazine for landlords and property investors.

The first issue is free so click here to try today!

Got a burning tax question?

Why not submit a tax question to our tax advisors

Ask a Question