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Where Taxpayers and Advisers Meet

income from rental

Posts: 4
Joined: Fri Sep 23, 2016 2:23 pm

income from rental

Postby m3trackboy » Fri Sep 07, 2018 12:25 pm

My parents left my two sons a house when the passed away. I rent it out and the income is used to pay school fee's. At the moment I put the income on my self assessment return.
One of my sons is in America and paying tax in America but the youngest who is about to turn 16 is the one who the rental income is paying school fees.

The question is does the 16 year old have a tax allowance and if so can I off set the rental income on his allowance? he wont be working and is still in full time education.

Many thanks

Posts: 865
Joined: Fri May 16, 2014 3:47 pm

Re: income from rental

Postby AGoodman » Fri Sep 07, 2018 1:21 pm

You need to be clear how the property is held. Whose name is it registered in and on what terms? Was the property left to them outright or to be held for them when they reach 18/21/25?

If this property is owned by the boys outright (possibly with you holding it in your name ), this is all a bit wrong. The income belongs to them so they should be the ones declaring it - not least because it would be covered by the their personal allowance as you say. If there is some form of express or implied trust then you should perhaps be declaring it on a trust return.

The son in the US could well be required to declare it to the IRS. He may not need to declare it here if his UK income is covered by his UK personal allowance (as I suspect it is).

Also - if the older is happy to donate his net half to pay his brother's school fees, that is fine, but he should realise he is doing it...

Posts: 4
Joined: Fri Sep 23, 2016 2:23 pm

Re: income from rental

Postby m3trackboy » Fri Sep 07, 2018 2:31 pm

Thanks for the reply

The property is registered in the boys names and has never been in my name
The older one is fine with the arrangements of paying the school fees

The net rental income is £10500 per year do I need to complete a return for the 16 year old?

Many thanks

Posts: 206
Joined: Thu Aug 16, 2012 4:31 pm

Re: income from rental

Postby DavidTreitel » Tue Oct 16, 2018 9:36 am

The son in the United States needs to be registered in the UK for the non-resident landlord scheme and file a UK tax return.

In the United States he is similarly required to declare his share of the income and claim expenses (including depreciation). Hopefully he is recording his share of money you are holding on his behalf on Form 8938 or if he is in effect gifting it to you each year filing annual US gift tax returns.

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