Rental to Family Member + Other

[Johnw996]

Hi,
I am intending to buy a flat for my daughter and rent a spare room to her friend.
I'm sure I'd be liable to IT on the rental income. To what extent would I be able to claim deductions for the costs (loan interest, fees, furniture etc) of setting up and maintaining the property ?
I don't think I'd be allowed to claim deductions for costs incurred for my daughter's benefit, but could I claim for costs incurred for the friend's room plus a share (50%?) of common property costs ?

Thanks for any help you can offer on this matter.

JohnW996

[Telometer]

Sorry, hadn't seen this.

You could indeed claim a deduction for the costs attributable to friend. But there are no tax deductions for buying furniture (only for repairing or replacing).

Better still. Lend the money to your daughter - with a charge over the property - and let her buy the property. She can then let it out under the rent a room scheme, which is tax free for £4,250 of rent. Moreover, when she sells the property, it will be CGT free - whereas if you sell the property you will have to pay tax on it.

Given the charge you put over the property (secured loan, "mortgage") you will not be at risk of a boyfiend running off with her money.

[jeffrey]

I agree, but OP should make sure that he/she and daughter agree on the format of Legal Charge and her obligations under it. Once the loan is made and the Deed exists, it cannot be unilaterally altered- and agreed certainty at the start minimises possible disputes later.

[quarterday]

Just so....tele, an apt description