Hi, my son has just been told he is being left a house in a will by his granny, who is now in a nursing home. She is giving him the keys and says he can have the house now as she will no longer be living in it. He is in college and would love to rent it, as he is in college in another city and needs to pay for his accommodation.
any tips/advice please
Don't see anything stopping him renting it out. This is what needs to be considered:
- the rent would surely belong to granny
- income tax would have to be paid by her
- he could rent it out and pay house insurance and repairs out of it
- the income from rent is -happily- no longer assessed for Fair Deal.
The Good News:
- Granny can gift her grandson 3K annually without any tax implications for either party.
The reason the Fair Deal was changed was to encourage houses left vacant while people spent years in nursing homes. This case is perfect for that. And your son will learn to manage property.
In addition, Granny ought to pay him for managing the property. It is an actual task. So I would suggest 10% of rent. He'll have to declare that as income, but presumably he'll be earning little to no other money and so no issues on that score either.
Be careful about pre letting expenses. Come back to us on that if you decide on this route.
The benefits
- property is minded
- income received
- grandson learns how to manage as a landlord
- he gets paid for so doing
- house insurance is paid out of rental income
- house is maintained to a good standard out of rent
- somebody gets housed
- he should also complete the income tax returns for granny.