Rent apartment to my sister.

mickmac76

Hi

My tenant left my apartment at the end of September and my sister is interested in renting it from me. The problem is that she can't afford the full rent amount. I'm very happy to rent it out to her at a lower rate (about 35% below the current price ).
My only concern is if she were to move out at some time in the future. Would I be able to increase the rent back to the market rate. The property is in a rent pressure zone.

Mick.

davindub

mickmac76 wrote: »

Hi

My tenant left my apartment at the end of September and my sister is interested in renting it from me. The problem is that she can't afford the full rent amount. I'm very happy to rent it out to her at a lower rate (about 35% below the current price ).
My only concern is if she were to move out at some time in the future. Would I be able to increase the rent back to the market rate. The property is in a rent pressure zone.

Mick.

Your sister might check out Capital acquisitions tax as well, there is an annual small gift exemption and a lifetime exemption between siblings. The blood relative connection means there is a deemed gift of the discount.

You would be limited to the RPZ calculation, but its a short term measure rather than a permanent measure.

Fian

mickmac76 wrote: »

Hi

My tenant left my apartment at the end of September and my sister is interested in renting it from me. The problem is that she can't afford the full rent amount. I'm very happy to rent it out to her at a lower rate (about 35% below the current price ).
My only concern is if she were to move out at some time in the future. Would I be able to increase the rent back to the market rate. The property is in a rent pressure zone.

Mick.

no, you would not be able to increase the rent back to market rate. The cap would operate at 4% per annum from the discounted rent you set for your sister.

I don't believe, and you would be foolish to assume, that the RPZ legislation will be allowed to lapse after 3 years. It is highly likely to be with us for an extended period.

pilly

In reality who's going to report the rent that the sister is charged to the RTB or anyone else for that matter though?

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Browney7

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When the OP registers with RTB they state the rent.

Then when the OP makes a tax return, they will show the rent amount.

So both revenue and RTB will have an official record of the rent paid.

There have been recent articles that have suggested rent increases will be investigated without the need to report, and that landlords may need to write to RTB to inform of a rent increase before increasing it. (not sure how that works for new tenant though)

Essentially, assume this will all be tightened up and the RPZ rules will continue for the foreseeable.

Why doesn't the OP state the rent is market rent, register on that basis, get the sister to pay the first month at that level and then she goes into "arrears" for future months. Op then just doesn't pursue arrears as it's too difficult etc etc?

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Pawwed Rig

Browney7 wrote: »

Why doesn't the OP state the rent is market rent, register on that basis, get the sister to pay the first month at that level and then she goes into "arrears" for future months. Op then just doesn't pursue arrears as it's too difficult etc etc?

Would a landlord not pursuing arrears be reasonable? Maybe

Would a landlord allow a tenant stay long term where they are in arrears with no effort to resolve the situation be reasonable?? Unlikely

I would note that rent is taxable as it arises and not when received.

She could just rent "one room" in the house rather than the full house she would only have to pay a percentage of the full house. The other rooms could just be for your own use officially. This would get around the setting of rent as firstly it can be argued she is a licensee (thus the house is not subject to the rpz rules) or secondly even if she is considered a tenant she would only be paying a percentage of the full rent.

I don't see how anyone could claim she would have a CAT liability though, why doesn't every tenant renting below market rate have a CAT liability if that's the case. I don't think the fact its a sister makes any difference.

Browney7

Pawwed Rig wrote: »

Would a landlord not pursuing arrears be reasonable? Maybe

Would a landlord allow a tenant stay long term where they are in arrears with no effort to resolve the situation be reasonable?? Unlikely

I would note that rent is taxable as it arises and not when received.

I'm only putting it out there as a hypothetical example. Op issues the arrears notice and sister says "oh it's coming I swear". OP then never moves to evict - says they were afraid she'd stop paying anything, can't believe my sister would do such a thing to her own brother etc etc.

I think people are thinking too much about this to be honest - unless his sister is a weapon and turns on her own brother.

Baby01032012

Plenty of valid options in the posts above.

In relation to rent arrears could pursue through RTB and sister leaves with no forwarding address so RTB can't pursue sister and brother has exhausted all avenues.

Agree this is being over thought though. I mention above as I had a tenant in rent arrears who left and despite PPS and in receipt of DSP payments RTB couldn't locate another address despite their vast databases.

davindub

Memphis Mammoth Choke wrote: »

She could just rent "one room" in the house rather than the full house she would only have to pay a percentage of the full house. The other rooms could just be for your own use officially. This would get around the setting of rent as firstly it can be argued she is a licensee (thus the house is not subject to the rpz rules) or secondly even if she is considered a tenant she would only be paying a percentage of the full rent.

I don't see how anyone could claim she would have a CAT liability though, why doesn't every tenant renting below market rate have a CAT liability if that's the case. I don't think the fact its a sister makes any difference.

Because it's a revenue rule regarding transfers between blood relations.

davindub

davindub wrote: »

Because it's a revenue rule regarding transfers between blood relations.

What if the RPZ rules force the property to be let below market rate?

Pawwed Rig

Memphis Mammoth Choke wrote: »

What if the RPZ rules force the property to be let below market rate?

Then that is market rate as in the same price as would be charged to a third party.

billybonkers

Rent one room to her...

Or set it up on Air BnB and get her to pay you through that for one room...

Marcusm

Pawwed Rig wrote: »

Would a landlord not pursuing arrears be reasonable? Maybe

Would a landlord allow a tenant stay long term where they are in arrears with no effort to resolve the situation be reasonable?? Unlikely

I would note that rent is taxable as it arises and not when received.

I would probably modify your last statement to note that the “arising” basis of assessment equates to when one is entitled to it and not when one receives it. If rent was payable annually in arrears, it only arises at the end of the year and is taxable even if not paid until some later time. However, if such a lease was granted today, no income would be assessable in 2017 as “arising” is not synonymous with accruing.

Donald Trump

Set the rent very high. The only issue then is that you might not find a renter. Unfortunately if you can't find a tenant...well it's not good to leave the house unoccupied for both security and maintenance reasons.

Maybe you might even have a family member, such as a sister, who might call into the place, or even stay there a few nights a week to look after the place.

<snip>

Mod Note: even cryptic suggestions of illegal activity are against the forum charter.

jimmycrackcorm

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Threshold invented it for advising tenants to overhold.

Jillian Gorgeous Stockpile wrote:

She could just rent "one room" in the house rather than the full house she would only have to pay a percentage of the full house. The other rooms could just be for your own use officially. This would get around the setting of rent as firstly it can be argued she is a licensee (thus the house is not subject to the rpz rules) or secondly even if she is considered a tenant she would only be paying a percentage of the full rent.

Good idea. The other rooms can be left 'waiting to be rented' .

Donald Trump wrote:

Set the rent very high. The only issue then is that you might not find a renter. Unfortunately if you can't find a tenant...well it's not good to leave the house unoccupied for both security and maintenance reasons.

Maybe you might even have a family member, such as a sister, who might call into the place, or even stay there a few nights a week to look after the place.

Are you in the correct thread?

Claw Hammer

Should be no problem giving the sister a licence. No need to register a tenancy and after 2 years the rent cap would be broken.