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Property income can de divided into three categories depending on the type and style of income you receive:
If you decide to let a room in your own home then you may qualify to have the income classified under a provision known as the “Rent a Room Scheme”. This can be beneficial, depending upon the specific circumstances, as it provides tax exemption for individual income up to £7,500 pa. No other expenses may be claimed against income above this limit.
However, if the expenses incurred exceed the rental income or the £7,500 exemption limit then it could be more beneficial not to use the Rent a Room scheme but to claim all the expenses and available deductions.
If you have any holiday homes which you rent out you must take care to meet set rules dictating the minimum number of weeks let. You must also ensure the records are kept separate from those of any other property income. Depending on whether the property is located in the UK or elsewhere within the Eu different rules will also apply.
This category covers most other types of income arising from property, whether it is let furnished or unfurnished.
In these times of low interest rates many with surplus cash to invest are turning once again to property investment. Low prices can make housing an attractive proposition for those able to set aside capital for the longer term.
However, unlike savings in most bank and building society accounts tax will not be deducted automatically from any income arising from your property investments; the declaration and accounting for such income along with any tax due will be solely down to you the owner.
Property income covers anything from a garage at the bottom of your garden to a property you inherited or one you bought as an investment.