Market rent

[nicholas_b 45]

Hi Hubbers,

Interesting one. I recently had an offer accepted on a house, and I'm hoping it should be completed within 2 months (straightforward btl).

Someone I know, and have known, for a long time asked about renting it. I'm quite keen to do that, and would discount it, because I know for certain they'd be a good tenant. When it comes to taxation, would I be taxed based on rent charged and received or tax based on what the market value is. Everything would be done formally and include a tenancy agreement. 

It would be around 20% less than market rent.

Thanks 

[DerekT 204]

Congrats on the purchase Nicholas, hope the process to completion is a smooth one. 

Tax wise it'll be based on the rental income received, less the expenses. 

As for the 'mates rates', just be sure everything's documented in the AST as you've mentioned, and everything is adhered to as a landlord (e.g. deposit protected, right to rent check, how to rent leaflet etc). This will cover you in the unfortunate event that things turn sour in your relationship with your friend/acquaintance. Seen on some occasions on shows like 'Nightmare Tenants' where the tenant takes advantage of the discounted rent and can't be evicted properly as the landlord didn't follow the correct procedures. 

[el_porto 1]

On 11/22/2020 at 4:48 PM, DerekT said:

Congrats on the purchase Nicholas, hope the process to completion is a smooth one. 

Tax wise it'll be based on the rental income received, less the expenses. 

As for the 'mates rates', just be sure everything's documented in the AST as you've mentioned, and everything is adhered to as a landlord (e.g. deposit protected, right to rent check, how to rent leaflet etc). This will cover you in the unfortunate event that things turn sour in your relationship with your friend/acquaintance. Seen on some occasions on shows like 'Nightmare Tenants' where the tenant takes advantage of the discounted rent and can't be evicted properly as the landlord didn't follow the correct procedures. 

100% Correct - follow this advice. 

[david slater 79]

Good advice has been posted, I would suggest also to take care you aren‘t breaching your mortgage lenders terms.