Family offering property to rent for cash payments

marymurphy3214

Hi all.

Currently living and renting in Dublin city centre and a family member has approached me offering to rent a property of theirs for a very reasonable rate. However, they would be looking for cash payments. I am very conflicted as the property is very suitable otherwise but I’m not sure if I would be comfortable supporting any tax evasion or if this would be an issue for me down the line (re banking statements etc). Given the state of the rental market at the moment, I’m wondering if I’d be a fool to let this by me also. I have no other reason to mistrust them or have any doubt in the arrangement but am conflicted so would appreciate any input or advice.

Thanks in advance.

Tenigate

Simply withdraw the same amount every month from the same bank account. That proves you're paying rent as far as the bank is concerned.
The tax end of it is your family member's concern.
Despite what your family member thinks, you'll still likely have all the rights of a regular tenant. In my view, your family member would be better doing everything "above board"
(If the family member is a parent or child, ignore the above as there are exceptions)

Nomis21

You could get a rent book from a stationary shop and ask your family member to sign it each time you pay the rent. This will keep a record just for your own purposes.

Bargain_Hound

OP, I was in the same position. Cash & rent book completed & signed by landlord every month sufficed perfectly when applying for a mortgage. Very glad I recorded all transactions now, all banks analysed this against the monthly cash withdrawals.

TheIronyMaiden

Bargain_Hound wrote: »

OP, I was in the same position. Cash & rent book completed & signed by landlord every month sufficed perfectly when applying for a mortgage. Very glad I recorded all transactions now, all banks analysed this against the monthly cash withdrawals.

This is important - pay cash by all means but definitely keep a written record of it between both parties. Wouldn't entertain it otherwise.

mrs.doubt.fire

I was going to suggest the rent book which you can buy in most stationary shops, but it has already been suggested. But hopefully your relation will agree to signing it every month. If not then don't take their house, it has to be in your favor as much as it is in their favor to have a relation living in the house.

BUT...then again from my own experience as a landlord...never work with family and relations, they are the first to F you over! Excuse my French lol

Fol20

If morally you don’t agree with it. Do not take the house. It is already mutually beneficial for both. You pay less in rent per month but it is cash. Ignore what everyone else is saying here. If he is asking for it in cash, I highly doubt he will sign a rent book. Everything would be in tenants favour if you did it that way. If your looking for a rent book etc he may as well charge full rate for it then.

Nomis21

seenitall wrote:

Tbh, I think it would be well nigh impossible to "surprise" me in that manner. Men have Adam's apples, women don't, men and women's bones structures (think shoulders) and where the fat lands on them are different, not to mention the muscle systems, hair growth patterns, or voice difference. Just look at someone like Chaz Bono, if you are observant enough, there will be MANY giveaways. I really don't think that someone born as a woman could fool me for very long. Talking on average of course. Of course, there are exceptions to every rule, but I do think in this instance they would be rare.

Fol20 wrote:

If morally you don’t agree with it. Do not take the house. It is already mutually beneficial for both. You pay less in rent per month but it is cash. Ignore what everyone else is saying here. If he is asking for it in cash, I highly doubt he will sign a rent book. Everything would be in tenants favour if you did it that way. If your looking for a rent book etc he may as well charge full rate for it then.

Not necessarily true. Probably the owner just doesn't want it showing in his bank account.

Bargain_Hound

Fol20 wrote: »

If morally you don’t agree with it. Do not take the house. It is already mutually beneficial for both. You pay less in rent per month but it is cash. Ignore what everyone else is saying here. If he is asking for it in cash, I highly doubt he will sign a rent book. Everything would be in tenants favour if you did it that way. If your looking for a rent book etc he may as well charge full rate for it then.

My landlord (not family) signs mine without issue and I pay a substantial amount in cash every month.

What he does with the cash/disclosure of funds is his own business, no moral obligation on me.

Fol20

Bargain_Hound wrote: »

My landlord (not family) signs mine without issue and I pay a substantial amount in cash every month.

What he does with the cash/disclosure of funds is his own business, no moral obligation on me.

If they are asking for a substantial amount of money in cash and not through a bank in this day and age it only means one thing in my eyes. Yes no moral obligation on you and no liability for you either but if he is doing something he shouldn’t be doing and signing some documents. He may as well just shoot himself in the foot before he even starts.

Eric Cartman

rent it, its cheaper for you and you don't have to be concerned about where the money is going. Up to revenue to try come find your relative.

bucketybuck

Damn, I wish I had a family member asking me if I wanted a cheap house in the city centre.

BarryD2

You say that you've no reason to mistrust your relative. I'd be thinking that most people in this situation would happily accept the offer and be thankful for the consideration. What they do or not do with the cash is not really your business. You're not your brother's keeper etc.

davo10

I think you should stand on your principles, enter the worst rental market in memory, search for a property where you pay a shed load more, for less, and let your family member give the deal to some other lucky person who will not give it a second thought before accepting. There are literally thousands who would love to have a family member offer the same deal.

the_syco

marymurphy3214 wrote: »

I am very conflicted as the property is very suitable otherwise but I’m not sure if I would be comfortable supporting any tax evasion or if this would be an issue for me down the line (re banking statements etc).

Take the same amount out every month on the same date (eg; the 5th of each month), and use it to pay the rent.

AmberGold

As a fully tax compliant reluctant small time landlord I’m surprised with the responses here.
There is only one reason any landlord sees cash over EFT as preferential.
What’s the difference between evading tax and knowingly assisting some one else to?

sydthebeat

AmberGold wrote: »

As a fully tax compliant reluctant small time landlord I’m surprised with the responses here.
There is only one reason any landlord sees cash over EFT as preferential.
What’s the difference between evading tax and knowingly assisting some one else to?

Because its the landlords responsibility to be tax compliant and not the tenant?

Cash is still very much a valid means to do a financial transaction.

davo10

AmberGold wrote: »

What’s the difference between evading tax and knowingly assisting some one else to?

Income earner pays tax.

To be fair, in this market, owner could probably charge the full, tax inclusive amount, and still rent the property in Dublin. He is offering it at a substantially reduced price to a family member, but for cash. Personally, I think if the op can't see the benefit in that, the owner should put it up to full price and pay the tax, the op will have plenty of time to regret her decision while paying a lot more somewhere else.

listermint

davo10 wrote: »

Income earner pays tax.

To be fair, in this market, owner could probably charge the full, tax inclusive amount, and still rent the property in Dublin. He is offering it at a substantially reduced price to a family member, but for cash. Personally, I think if the op can't see the benefit in that, the owner should put it up to full price and pay the tax, the op will have plenty of time to regret her decision.

When trying to get a mortgage yes most likely.

davo10

listermint wrote: »

When trying to get a mortgage yes most likely.

A bit of lateral thinking, remove the same amount of cash on the same date every month, that's your rent. Cash is still legal tender you know. I've been a LL for 25 years, I've never been contacted by a tenants bank to confirm payment of rent.

davo10

Op, will you get a rental property elsewhere?, will you be able to pay the market rate in Dublin? Will you be able to save to buy a property if you have to pay market rate? The answers should help you decide whether to accept your family member's extremely generous offer.

This offer wholely benefits you, the risk is on the family member's side, not yours.

e.r

Make sure to change all the utility bills into your name. If it ever got nasty there is your proof of tenure.

bucketybuck

I can't see the issue, I must admit.

I pay my landlord in cash every month. Now, I send him that cash electronically via a standing order to his bank account but effectively its still just me giving him X amount of cash. I have no idea what he does with the cash after that point and its none of my business what he does with it after that point.

Whats the difference between putting X amount of cash in his hand or putting X amount of cash in his bank account? Its all the same to me surely, when even the issue of recording payments is trivial to address?

listermint

Why are you even thinking about it. It's win win, you get cheaper rent and your family member avoids our draconian level of tax on rental income. I'd be glad to be helping a family member out.

listermint wrote: »

When trying to get a mortgage yes most likely.

As others have said just withdraw the amount from the same machine at the same time every month. Even at that I really don't think rent payments are the difference between getting and not getting a mortgage. I know plenty of people who got mortgages recently having never lived out of home or paid rent.

There is also the fact he will likely be able to save a lot more. I know someone paying about 500 euro under market rate as they are paying cash in hand. They are saving all the difference so after say two years they will have 12k more of a deposit. That's a lot more beneficial than paying big rent purely to have a monthly standing order on your bank statement.

omega666

For Mortgage application Banks only look for the previous 6 months statements so plenty of time to get affairs in order if that is a worry for the tenant.

If i was the OP i would snap the LL's hand off.

Claw Hammer

bucketybuck wrote: »

I can't see the issue, I must admit.

I pay my landlord in cash every month. Now, I send him that cash electronically via a standing order to his bank account but effectively its still just me giving him X amount of cash. I have no idea what he does with the cash after that point and its none of my business what he does with it after that point.

Whats the difference between putting X amount of cash in his hand or putting X amount of cash in his bank account? Its all the same to me surely, when even the issue of recording payments is trivial to address?

You are not making a cash payment, you are making a credit transfer. It appears in the landlords bank account as a credit transfer.
the difference between that and handing over cash is that the cash when handed over may never be paid into a bank account and therefore, the revenue Commissioners may not be told about it and if there is an audit and bank accounts are examined it won't show. Most accountants will demand to see a record of payments and amounts when doing a tax return. Normally there is a bank statement with a history of incoming payments. When someone turns up with a notebook written in pencil showing money being accepted, alarm bells ring.

bucketybuck

Claw Hammer wrote: »

You are not making a cash payment, you are making a credit transfer. It appears in the landlords bank account as a credit transfer.
the difference between that and handing over cash is that the cash when handed over may never be paid into a bank account and therefore, the revenue Commissioners may not be told about it and if there is an audit and bank accounts are examined it won't show. Most accountants will demand to see a record of payments and amounts when doing a tax return. Normally there is a bank statement with a history of incoming payments. When someone turns up with a notebook written in pencil showing money being accepted, alarm bells ring.

And not a single part of that is any of my business.

Like I said, I give him the money and once the transfer goes into his bank account I do not have one single clue what he does with it next. Functionally it is exactly the same to me as giving it to him in cash. Value X gets passed to the landlord and my involvement ends right there.

Claw Hammer

bucketybuck wrote: »

And not a single part of that is any of my business.

Like I said, I give him the money and once the transfer goes into his bank account I do not have one single clue what he does with it next. Functionally it is exactly the same to me as giving it to him in cash. Value X gets passed to the landlord and my involvement ends right there.

It is the same to you from the point of view of the cost. It is not the same from having evidence of payment. If the landlord came to your door every Friday with
a dog- eared notebook and took the money from you in cash, how would you prove that you had paid him at all or how much you paid him?

bucketybuck

Claw Hammer wrote: »

It is the same to you from the point of view of the cost. It is not the same from having evidence of payment. If the landlord came to your door every Friday with
a dog- eared notebook and took the money from you in cash, how would you prove that you had paid him at all or how much you paid him?

The same way tenants handled rent payments for years before electronic payments became commonplace? Ways that have already been mentioned in this thread?

Idbatterim

"tax evasion" LOL people saying this, what do you think about the tax theft the government creaming off over half your money over E34,750? spare me! It will be sent up in smoke when the government get their hands on it...

Woopsey

Is there not a risk to the op that the owner is not paying their mortgage and the op could be kicked out with no record of payment.

omega666

Woopsey wrote: »

Is there not a risk to the op that the owner is not paying their mortgage and the op could be kicked out with no record of payment.

Nothing to suggest in previous posts that the owner is not paying
his mortgage. You can rent for cash and still pay the mortgage.
Also there may be no mortgage, it may be fully paid off.

And owner is a family member of the OP so the chances of
screwing them over would seem to be slim.

TheChizler

bucketybuck wrote: »

The same way tenants handled rent payments for years before electronic payments became commonplace? Ways that have already been mentioned in this thread?

That's all that's being advised: when paying cash be sure to get a record of payment.

davo10

Woopsey wrote: »

Is there not a risk to the op that the owner is not paying their mortgage and the op could be kicked out with no record of payment.

If the tenant does not have a fixed term contract (unlikely in the ops scenario that they would have one) the tenant can be evicted anyway if the property is to be sold. How or if the rent is paid would not effect that, the bank would want vacant possession.

Claw Hammer

bucketybuck wrote: »

The same way tenants handled rent payments for years before electronic payments became commonplace? Ways that have already been mentioned in this thread?

A trail through a bank is foolproof. All this withdrawing at the same time every month, same amount leaves open the allegation that it was a set up. Before electronic payments became commonplace it was a frequent occurrence for landlords to deny ever getting a deposit. Years ago it was weekly payments in cash with a small deposit. An non-paying tenant was out on his ear quickly. Lost deposits were small and tenants moved on and wrote them off.

davo10

Claw Hammer wrote: »

A trail through a bank is foolproof. All this withdrawing at the same time every month, same amount leaves open the allegation that it was a set up. Before electronic payments became commonplace it was a frequent occurrence for landlords to deny ever getting a deposit. Years ago it was weekly payments in cash with a small deposit. An non-paying tenant was out on his ear quickly. Lost deposits were small and tenants moved on and wrote them off.

It's a family member we are talking about here, offering a substantial reduction to a relative, Jesus wept, only in Ireland.

TheChizler

davo10 wrote: »

It's a family member we are talking about here, offering a substantial reduction to a relative, Jesus wept, only in Ireland.

As has been pointed out it's not just concern about the landlord screwing them over, banks often require receipts to prove rental payments when applying for loans.

Claw Hammer

Claw Hammer wrote: »

A trail through a bank is foolproof. All this withdrawing at the same time every month, same amount leaves open the allegation that it was a set up. Before electronic payments became commonplace it was a frequent occurrence for landlords to deny ever getting a deposit. Years ago it was weekly payments in cash with a small deposit. An non-paying tenant was out on his ear quickly. Lost deposits were small and tenants moved on and wrote them off.

TheChizler wrote: »

As has been pointed out it's not just concern about the landlord screwing them over, banks often require receipts to prove rental payments when applying for loans.

As I said though, whether they accept the withdrawl as being rent or not isn't going to be the difference between getting a mortgage or not considering loads of people have never rented and get a mortgage or move back in home to save and are therefore not paying rent in the key period in the run up to applying for the mortgage.

The far higher savings enabled by lower rent will be far more beneficial in both getting the mortgage and increasing the deposit. It would be madness to pay a few hundred more a month (thus reducing savings by this amount) for nothing but a standing order appearing on your bank statement.