Moving son into rental property-gifting rent

C

Colby

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Hi
I have a property which previously generated rental income but now I want to let my son and his wife live rent free there for couple of years as the try save for their own.
Question can my wife and I each ‘gift’ them 3k in rent ie total €12k so there is no tax liability for any party.
Am I right in thinking if this can’t be done the couple would have a benefit in kind type liability or similar.

what implications would this have on future rentals in rent pressure area?

Tks
C
 
Interesting question.. I'm no expert but suggest the following. I do think you can gift to each of them as you suggest.

Gift them the 12K max allowable at the start of the period, lodge same to an account from which they then pay 1K rent monthly leaving zero balance at end of year. Repeat as necessary.

Regarding your RPZ query, if 1K monthly rent is below market rent for you area, then it would have negative implications for future rent increases/resale values bearing in mind the 4% cap limitation. Media comments on the rental cap being exceeded by landlords would suggest otherwise.

The couple may have BIK liability for the difference between market rent and 1K charged.

To what extent either of the above are monitored, I don't know and if in doubt do seek expert advice.

Good luck!
 
It comes down to number crunching, and you may well need a professional to get a clear answer. You will still pay tax on the rent. How does that compare to what they would pay in BIK living rent free? I suspect long term it will be easier if you just let them live there rent free. That way any tax implication falls on them rather than you. It also has the advantage that you aren't impacting the rent you can ask in the future, which could be the case if you charged them a low rent.
 
3k per year per child

I don't think daughter in law qualifies?

I don't think your wife can add another 3k
 
If u give a couple 3000 each and my wife does likewise. That's 12000.

And instead if charging them 1000 a month in rent, we in theory gift them the 1000. Is there a tax liability for me or the couple?

I don't want to know peoples personal opinions, just rather the answer.
 
Since letting property is so stressful and risky now you may not want to let anymore until the government stop messing around with the goal posts.
So rather than leave the property unattended while you wait for more reasonable landscape to appear don't rent it.

Pay your son and his wife €50 euro a month to move in and look after the place for you.
Your son can buy his dad a few pints with the €50.
 
By gifting them 3 k each from each of you there is no tax liability.

But are you not technically still receiving rent of 12000 a year and liable to income tax, prsi and USC on all that???
 
Plenty of wild stuff in this thread!

You don’t gift them cash for them to then pay you taxable rent.

A Mum and Dad can gift their son and daughter-in-law €12k a year with no tax consequences.

If the market rent is €12k a year, then it’s very simple. But even if it’s more, there are ways to chip away at the number. “Caretaker discount” for example; usually 20-40% of the market rent depending on who you talk to. And if my Dad rents a property to a stranger and the washing machine breaks down, the stranger calls him and he sorts it out. If I’m living in his property rent free, the washing machine breaks down, and I call him, he laughs at me. So market rent isn’t really appropriate as it is not a landlord/tenant relationship.
 
Gekko they have to pay tax on the rent whether it's received or not is my understanding.

The reduced rent for caretaker discount would revenue be ok with that rather than market rent. Because there is a rule about uneconomical letting.

They also run into the issue of later not being allowed the rent to market rent if the property is in a rental zone which devalues the property for sale purposes.
 
According to the citizens advice website
The residential tenancy act does not apply to
  • Dwellings in which the spouse, parent or child of the landlord lives. This applies to informal family arrangements where there is no tenancy agreement in writing. However, the Acts do cover formal agreements between family members, for example where a lease has been signed.
If there is no tenancy, I can’t see how RPZ rules would apply.
 
Colby said:
Hi
I have a property which previously generated rental income but now I want to let my son and his wife live rent free there for couple of years as the try save for their own.
Question can my wife and I each ‘gift’ them 3k in rent ie total €12k so there is no tax liability for any party.
Am I right in thinking if this can’t be done the couple would have a benefit in kind type liability or similar.

what implications would this have on future rentals in rent pressure area?

Tks
C
Click to expand...
Just let them move in and don't charge them any rent. Don't have a rental agreement in place.
 
Bronte said:
Gekko they have to pay tax on the rent whether it's received or not is my understanding.

The reduced rent for caretaker discount would revenue be ok with that rather than market rent. Because there is a rule about uneconomical letting.

They also run into the issue of later not being allowed the rent to market rent if the property is in a rental zone which devalues the property for sale purposes.
Click to expand...

No they don’t!

And there is no rule around uneconomical letting; the difference is merely a gift.

The rental zone rules aren’t relevant.

Nil rent has CAT implications but that’s it.
 
Hi
I have been on to RTB who confirmed no need to register this tenancy. I have also confirmation from Revenue my son could avail of rent a room scheme if he rented second room. They suggested I speak to a tax adviser re BIK but confirmed I could gift rent up to €3k per person tax free

Tks
 
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