Property tax

[dhoops97]

Hi all,

My father owns a handful of properties and he wants to change the tenancy agreements to make my brother and I the new landlords. His intentions are so that we can gain experience in managing properties and in return the rent would be paid into our joint bank account and we'd pay my dad every month. I assume that HMRC would require my brother and I to pay the tax every year, as we are receiving the rental income. Is this possible and will this be acceptable in HMRCs eyes. If so, my brother is unemployed and I'm nearly in the 40% tax bracket. Can we split the income in a tax efficient way?

[maths]

The suggestion is really not very sensible.

You and brother do not need to be on the tenancy agreements to learn how to manage properties. Indeed as neither of you are on the legal titles you can't enter into such agreements. In addition receiving rents to then transfers to father makes no sense.

[dhoops97]

Thanks you for your reply!

My dad wants to be completely hands off and essentially wants his children to manage the properties, thus changing the tenancy agreements. It might not be the smartest way to hand a property over to your children, but hey... As we will be paid the rental income going forward into a joint account between my brother and I, do you know if HMRC will allow us to split the income in a tax efficient way, as he is at university and I'm working full time.

[maths]

The parties to a tenancy agreement are the landlord (ie legal owner of the property) and the tenant (ie person occupying it).

You and your brother therefore need to have legal title to the property to enter into a tenancy agreement and to become entitled to the rental income need to own it beneficially..

It doesn't appear that your father wishes to transfer his beneficial or legal ownership to you/brother?

[bd6759]

Father can grant a lease to the brothers, allowing them to sub lease to tenants.