Daughter is 18 can we rent a room in her name

JDMC2 · 23-03-2020 12:57am #1

I’m on Illness Benefit (severe depression).
Husband is awol.
I Have a mortgage.
Daughter is now 18. Still in school and hopes to go to college in September
I have a garage converted to one bed apartment
Can this apartment be rented out in my daughter’s name? I need the income for her to go to college?
If so, how do I go about it? I want to do this properly
Does she need to be named on mortgage?
Thanks so much

RedXIV · 23-03-2020 1:34am

To clarify, are you looking to rent the room TO your daughter or have the renter pay rent TO your daughter (on the books anyway?)

Die Hard 2019 · 23-03-2020 1:36am

The owner pays the tax

endacl · 23-03-2020 1:41am

You can rent a room in your own home. What you do with the cash is up to you, subject to the limits of gifts to children.

Be careful. If it’s a separate dwelling, you’ll be entering into a tenancy agreement with somebody. This will leave you tied in to all sorts of regulations, and may not be worth the hassle. You’ll also have to meet minimum standards, which a converted garage may not satisfy. Have you planning permission for the garage conversion?

Would be much simpler if the garage was still accessible from the house, and therefore still part of it. You’re in rent-a-room territory there. It’s a license agreement, leaving you much more scope to get rid of any messers, and you won’t lose half the rental income to revenue.

amadangomor · 23-03-2020 1:46am

endacl wrote: »

You can rent a room in your own home. What you do with the cash is up to you, subject to the limits of gifts to children.

Be careful. If it’s a separate dwelling, you’ll be entering into a tenancy agreement with somebody. This will leave you tied in to all sorts of regulations, and may not be worth the hassle. You’ll also have to meet minimum standards, which a converted garage may not satisfy. Have you planning permission for the garage conversion?

Would be much simpler if the garage was still accessible from the house, and therefore still part of it. You’re in rent-a-room territory there. It’s a license agreement, leaving you much more scope to get rid of any messers, and you won’t lose half the rental income to revenue.

Know someone who did this with a granny flat that is connected but has its own entrance also. They just keep the connecting door between the house and the granny flat locked. They then rent it out under the rent a room scheme.

Don't take my word on it though as this might be a grey area.

23-03-2020 2:16am

OP, do you mean rent it out to her for like €1,500 a month, and claim HAP? Then obviously don't charge her, but use the HAP to get her to college?

Assuming you actually charged her, but then gave all the rent back to her as a gift to get her through college, I'm genuinely unsure if that'd be within the rules or not.

endacl · 23-03-2020 2:24am

Deleted User wrote: »

OP, do you mean rent it out to her for like €1,500 a month, and claim HAP? Then obviously don't charge her, but use the HAP to get her to college?

Assuming you actually charged her, but then gave all the rent back to her as a gift to get her through college, I'm genuinely unsure if that'd be within the rules or not.

There isn’t a hope in me hoop of that working out. The first question asked when applying would be ‘where have you lived up to now?’. Anything but a truthful answer would be contradicted by every piece of documentation held by the dept on the daughter. And lying on the application means the application would be filed under ‘bin’.

JustAThought · 23-03-2020 3:26am

endacl wrote: »

There isn’t a hope in me hoop of that working out. The first question asked when applying would be ‘where have you lived up to now?’. Anything but a truthful answer would be contradicted by every piece of documentation held by the dept on the daughter. And lying on the application means the application would be filed under ‘bin’.

you are also not allowed to rent or claim rent allowance on a family members property .

Rent a room scheme is your best bet - make sure you din’t include the bills as these can be really high and someone not paying a share of the utilities will take the **** and have the heat and every light on all day. I think the annual amount you can earn is aprox 14,000 without having to pay tax. Might interfere with your disability if that is means tested .

con747 · 23-03-2020 3:30am

<SNIP>

DubCount · 23-03-2020 9:08am

I think a few people are getting the wrong end of the stick on this post. I suspect the issue is the OP is on disability allowance, which is a means tested payment. If the income from renting out the stand alone unit is assessed on her, it could effect the means test and her main source of income. So the question is, as I understand it, can the income be assessed on her daughter in stead of herself to stop this happening.

Not 100% sure, but it looks to me like OP could gift the room to her daughter for a period (the Capital Acquisitions Tax threshold would be nowhere close to being breached), and then the daughter could rent out the room and claim the income as her income.

Worth getting some professional advice on this as its pretty edge case stuff.

Sleeper12 · 23-03-2020 9:19am

Daughter moves into the apartment and you rent her room out under the rent a room scheme. You can earn 14k tax free this way. I'm not sure if /how this might effect your disability benefit

TheChizler · 23-03-2020 9:24am

Isn't cohabitants income assessed as well, at 100% if they're self employed which I think renting out a room would be classed as?

JeffKenna · 23-03-2020 9:30am

DubCount wrote: »

I think a few people are getting the wrong end of the stick on this post. I suspect the issue is the OP is on disability allowance, which is a means tested payment. If the income from renting out the stand alone unit is assessed on her, it could effect the means test and her main source of income. So the question is, as I understand it, can the income be assessed on her daughter in stead of herself to stop this happening.

Not 100% sure, but it looks to me like OP could gift the room to her daughter for a period (the Capital Acquisitions Tax threshold would be nowhere close to being breached), and then the daughter could rent out the room and claim the income as her income.

Worth getting some professional advice on this as its pretty edge case stuff.

Can you draw a line through a house and split it like that? Seems very odd.

silver2020 · 23-03-2020 9:47am

DubCount wrote: »

I think a few people are getting the wrong end of the stick on this post. I suspect the issue is the OP is on disability allowance, which is a means tested payment. If the income from renting out the stand alone unit is assessed on her, it could effect the means test and her main source of income. So the question is, as I understand it, can the income be assessed on her daughter in stead of herself to stop this happening.

Not 100% sure, but it looks to me like OP could gift the room to her daughter for a period (the Capital Acquisitions Tax threshold would be nowhere close to being breached), and then the daughter could rent out the room and claim the income as her income.

Worth getting some professional advice on this as its pretty edge case stuff.

I think you are right - maybe the OP could confirm?

Because this would not be something that would come up often, there's unlikely to be a specific rule, so you look for the most advantageous interpretation.

Market rent is probably €8,000 a year (friend of mine rents a self contained granny flat for €700 a month)
Annual small gift tax exemption is €3,000 a year. So if flat was given to daughter €5,000 a year will come off the life gift exemption (currently €320,000)

Daughter could then rent this, but would be liable to her own tax on rental income.

However, IF there is a connecting door from the flat to the house - even if it is locked (can be a wardrobe behind it), the the rent a room scheme can be utilised and up to €14k a year rent can be had tax free.

If there's no connecting door, I'd create one now

But best to get advice of an accountant - its not expensive

23-03-2020 9:50am

OP, you are mixing up a few different principles.
A child being named on a mortgage isn't a matter of paperwork, she would have to have income to borrow against and part ownership of the house.

An idea that I'm sure someone else will explain wont work is to declare the granny flat as a separate asset, have that asset means tested against your disability allowance, but then be able to disregard any income from the asset as it has already been means tested as an asset.

You could run into future problems if say you sell the house and have separated the granny flat.

What might a granny flat be worth and how much would it reduce your disability allowance.

https://www.citizensinformation.ie/en/social_welfare/irish_social_welfare_system/means_test_for_social_welfare_payments/cash_income_not_included_in_the_social_welfare_means_test.html

Claw Hammer · 23-03-2020 1:18pm

Rent a Room income is not taxable up to the €14,000 limit, neither is it reckonable in a means test. Keep the rent below €14,000 per annum and you would have no problem.

TheChizler · 23-03-2020 1:22pm

Claw Hammer wrote: »

Rent a Room income is not taxable up to the €14,000 limit, neither is it reckonable in a means test. Keep the rent below €14,000 per annum and you would have no problem.

Are you certain about that? I might be looking up the wrong thing but this says:

How property personally used (your home) is assessed
The house in which you live is not included in the assessment of your means unless you are getting an income from it. If you have rented a room in the house, that income is assessed. You can deduct 5% of the gross rent you receive for wear and tear and 15% can be allowed for voids (vacant periods between lettings). However, if you are getting a State Pension (Non-Contributory) or a Widow's, Widower's or Surviving Civil Partner's (Non-Contributory) Pension and would otherwise be living alone, the income is not assessed at all.

https://www.citizensinformation.ie/en/social_welfare/irish_social_welfare_system/means_test_for_social_welfare_payments/means_test.html

Mrs OBumble · 23-03-2020 1:39pm

TheChizler wrote: »

Are you certain about that? I might be looking up the wrong thing but this says:

https://www.citizensinformation.ie/en/social_welfare/irish_social_welfare_system/means_test_for_social_welfare_payments/means_test.html

Assessed as income for social welfare purposes and taxable are two totally different thing.

You are both correct.

Meeoow · 23-03-2020 1:55pm

Your daughter should be entitled to the SUSI grant. Have you checked that out yet?

TheChizler · 23-03-2020 2:03pm

Mrs OBumble wrote: »

Assessed as income for social welfare purposes and taxable are two totally different thing.

You are both correct.

I'm only referring to means test assessment

TheBoyConor · 23-03-2020 2:13pm

amadangomor wrote: »

Know someone who did this with a granny flat that is connected but has its own entrance also. They just keep the connecting door between the house and the granny flat locked. They then rent it out under the rent a room scheme.

Don't take my word on it though as this might be a grey area.

Another work around to get out of the RT Act in granny flat set-ups is put a large sticker "FIRE EXIT" sticker on external door to the granny flat and then put a note in the licence agreement that the primary access and egress to the granny flat will be through the main house and that the granny flat door is a "fire exit" but may be used as an ancillary access/egress if necessary. Chances are the lodger would just use the fire exit all the time anyway rather than coming into the house.

That would put you in a strong position.

i would advise caution though. If you have an 18 year old daughter then only get a female tenant.

endacl · 23-03-2020 2:49pm

^^

Nonsense, and you know it.

TheBoyConor · 23-03-2020 2:50pm

It is in a way, but some of the arguments that combatative tenants and lodgers come up with are also nonsense. This just serves to reinforce that the primary entrance is via the house rather than a separate own entrance.

Gumbo · 23-03-2020 3:08pm

JDMC2 wrote: »

I’m on Illness Benefit (severe depression).
Husband is awol.
I Have a mortgage.
Daughter is now 18. Still in school and hopes to go to college in September
I have a garage converted to one bed apartment
Can this apartment be rented out in my daughter’s name? I need the income for her to go to college?
If so, how do I go about it? I want to do this properly
Does she need to be named on mortgage?
Thanks so much

If its connected to your house, then rent it under your own name under the rent a room scheme.
14k tax free per year.

Eric Cartman · 23-03-2020 8:29pm

the stink of HAP scam off this whole plan.

JDMC2 · 23-03-2020 10:14pm

DubCount wrote: »

I think a few people are getting the wrong end of the stick on this post. I suspect the issue is the OP is on disability allowance, which is a means tested payment. If the income from renting out the stand alone unit is assessed on her, it could effect the means test and her main source of income. So the question is, as I understand it, can the income be assessed on her daughter in stead of herself to stop this happening.

MOD

Added quote tags for clarity

Eric Cartman · 23-03-2020 10:23pm

JDMC2 wrote: »

I think a few people are getting the wrong end of the stick on this post. I suspect the issue is the OP is on disability allowance, which is a means tested payment. If the income from renting out the stand alone unit is assessed on her, it could effect the means test and her main source of income. So the question is, as I understand it, can the income be assessed on her daughter in stead of herself to stop this happening.

ahh, that actually does make sense, yeah I got the wrong end of the stick. It may end up shooting the daughter in the foot though as she wouldn't be eligible for any grants or anything with the income.

JDMC2 · 23-03-2020 10:27pm

Sorry I’ll clarify (and thank you for help)

I assume that I cannot rent-a-room in my garage as I’m on Illness Benefit of €203 per week......if I get income from rent surely Social welfare will say I can ‘work’?

My daughter just turned 18. She is doing her leaving cert. would it be possible to rent the room out but put the rental income into her name and bank account?

The whole purpose of this is to offset her rent costs in college in say Dublin, against what we receive for the room in the garage.

tedpan · 23-03-2020 10:38pm

JDMC2 wrote:

Iâ€™m on Illness Benefit (severe depression). Husband is awol. I Have a mortgage. Daughter is now 18. Still in school and hopes to go to college in September I have a garage converted to one bed apartment Can this apartment be rented out in my daughterâ€™s name? I need the income for her to go to college? If so, how do I go about it? I want to do this properly Does she need to be named on mortgage? Thanks so much

JDMC2 wrote:

I think a few people are getting the wrong end of the stick on this post. I suspect the issue is the OP is on disability allowance, which is a means tested payment. If the income from renting out the stand alone unit is assessed on her, it could effect the means test and her main source of income. So the question is, as I understand it, can the income be assessed on her daughter in stead of herself to stop this happening.

Wait, I'm confused. Aren't you the OP??

Gumbo · 23-03-2020 11:09pm

JDMC2 wrote: »

Sorry I’ll clarify (and thank you for help)

I assume that I cannot rent-a-room in my garage as I’m on Illness Benefit of €203 per week......if I get income from rent surely Social welfare will say I can ‘work’?

My daughter just turned 18. She is doing her leaving cert. would it be possible to rent the room out but put the rental income into her name and bank account?

The whole purpose of this is to offset her rent costs in college in say Dublin, against what we receive for the room in the garage.

https://www.revenue.ie/en/personal-tax-credits-reliefs-and-exemptions/land-and-property/rent-a-room-relief/what-type-of-residence-qualifies.aspx

wench · 23-03-2020 11:31pm

tedpan wrote: »

Wait, I'm confused. Aren't you the OP??

She seems to have copied DubCount's explanatory post from this morning

Daughter is 18 can we rent a room in her name

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