Buy to let / incapacity benefit

John

Are my partners residential buy to let profits considered as earnings in the same way as being employed would or are they viewed as a separate investment entity ? ie. She is disabled and unable to work and receives incapacity benefit, which is taxable, although below the threshold for paying any tax. However, is the remaining part of her nil tax band allowance able to be offset against her small buy to let profit ?

ahmedt01

does your partner also live in the property that is rented out, ifso then theres the rent a room scheme. if she doesnt then it will be taxable at the appropriate rate.

John

No she doesnt live there. I understand that any profits are taxable, but does the nil rate allowance work in the same way as it would for employment income - just because she rents a property out I dont think shes classed as self employed.

deanshepherd

Yes, her remaining personal allowance will be used to offset against the rental income.

John

Thanks for your reply. Is buy to let considered self employment or an investment ?

Dean

John wrote: »

Thanks for your reply. Is buy to let considered self employment or an investment ?

Hi John

It's investment income. A tax return will need to be completed because it is a source of un-taxed income. Even if you have made a rental deficit it is still reportable.

Regards

Dean

John

Thanks Dean.