You also need to consider the tax implications of gifting this rental income to your daughter.
Jonathan
You also need to consider the tax implications of gifting this rental income to your daughter.
Jonathan
Thanks all.
Most enlightening. I will take professional advice.
True, but DB says "We thought of putting it on the rental market and having the rental payments passed over to her so she could pay a mortgage. (She and husband are in low paid jobs)."
It's so difficult to advise based on half the info and vague hints. I see it from the OP's POV too, as he doesn't know what info is relevant.
:-)))))))))
However is the person considering becoming a landlord, they MUST go into it as a landlord, not a s a hobby. Either do it fully and professionally yourself - on call 24 hours a day, emergency repairs, marketing, letting, managing, etc. - or pay somebody else to do it.
One property isn't a full-time job (in my experience, about eight properties is one full-time person), but you MUST look at it as a job, with all the requistite responsibilities.
JGH
In message , DerbyBorn writes
The rental income from the existing house is your wife's for tax purposes. You cannot pass on the tax liability to anyone else. You can off set any repairs and running costs such as insurance against the rental. After your wife has met her tax liability handing over the remaining income to your daughter does not incur an immediate tax liability on her part. When your daughter inherits the house depending on the value she ay have to pay some IHT. If your wife survives 7 years or more after making a gift then no IHT is due.
This is a complicated matter so don't take the advice of well-meaning amateurs like me, go see a professional - accountant or solicitor.
Cash
Good point
I hear what you are saying but if the money enters the DB household via
BACS or a cheque and is withdrawn as cash and there is nothing to show for it in DBs household but the mortage of daughter gets paid without them having enoough apparant income...
The OP can also make unlimited regular IHT exempt gifts (e.g. monthly mortgage payments) out of income if it does not affect their standard of living. See
There are no recipient tax implications for financial gifts.
No, they are covered by a separate alowance as far as IHT is concerned, as are gifts on marriage.
MBQ
Whatever.
IHT but what about Income Tax on the daughters "unearned income"?
I be very surprised if there wasn't... seems on the face of it a loop hole big enough to drive the QE2 through. Define "financial gifts" for a start.
Again IHT and I am aware of exceptions of some sort for marriage gifts (from close relatives?).
This is why DB really does need to get good professional advice. There are so many interlinked, contradictory, badly worded and many exceptions in the many bits of legislation relating to IHT CGT, IT etc that the layman doesn't really stand a chance.
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