Rent a room, who makes the tax declaration?

athtrasna

Unusual situation. Couple John and May own a house jointly. They split. Mortgage is paid from John's account. John now lives in Norway.

May rents out a room, licensee lodges money to her account, May gets no benefit when rent only and some benefit when bills are due as bills are in her name.

Does May have to declare the income (though non taxable) or is it up to John?

jjjd

May would have to declare the income on her return as it is her residence that the relief is being claimed upon. Who pays the mortgage is irrelevant. You don't have to own the property to claim the relief.

athtrasna

jjjd wrote: »

May would have to declare the income on her return as it is her residence that the relief is being claimed upon. Who pays the mortgage is irrelevant. You don't have to own the property to claim the relief.

Thanks, I should have added that May transfers licensees rent straight to John, she acts as a collection agent. Does that make any difference?

jjjd

athtrasna wrote: »

Thanks, I should have added that May transfers licensees rent straight to John, she acts as a collection agent. Does that make any difference?

If she is merely acting as a collection agent (and not benefiting from the income) then I think rent a room relief does not apply. Therefore rental income will be taxable in John's hands. But best to get professional advice to be sure.

CIARAN_BOYLE

athtrasna wrote: »

Thanks, I should have added that May transfers licensees rent straight to John, she acts as a collection agent. Does that make any difference?

Mary and John need professional advice. Perhaps Mary pays half the mortgage but the money is paid in one direct payment by John, John therefore is just co-ordinating a payment to the bank by both of them.

Or maybe John is renting the property out and mortgage interest is a tax deductible expenses.

athtrasna

May pays a third of the mortgage, licensee pays a third and John pays a third, all through John's account. It is more complicated than I thought at first, think professional advice may be necessary. Though with May effectively being head tenant she could avail of rent a room