UK Taxation Treatment for Rental Income, Overseas Property, Rent a Room Relief

Property Rental Income for Individuals

UK Rents and licences are regarded as UK land and property. Land and property income is all income deriving from such property as if it were a trade. Therefore this is calculated as all income being assessed in the tax year on an ‘accruals’ basis. This means that income is taxed on an ‘arising’ basis in the year of assessment, i.e. income that is due in the year, and not necessary income that is actually paid by the tenant.

For example if a tenant per the tenancy agreement is obliged to pay £495 a month, the taxable income is £5,940 a year, irrespective of the fact the tenant might say pay late for their rent.

Since rental income is assessment like trade, all income from the different rental properties are pooled together, creating one income stream. Hence profits and losses of the same UK properties are amalgamated together to create the net profit or loss. In essence losses from one property is netted off against profits of the other.

If they are losses overall after pooling all the properties together, then these losses can be carried forward against future profits of property income. These losses cannot be set off against other income, e.g. employment income or self employed income. However, if losses arise due to ‘capital allowances’ this may then be relieved against other general income.

Capital allowances is the allowable decrease in value of the assets each year that are used in the properties. For e.g. fridges and ovens. Capital allowance rates will be 20% or 25% a year depending on current capital allowance rates.

Expenses are allowed to be deducted if they are incurred ‘wholly and exclusively’ for the purposes of the property.

The treatment for limited companies broadly follows the same rules as for UK individuals.

Income from Overseas Property for UK Residents and Domicile


Houston TX Apartments You Can Rent Without a Job

Houston, the 4th largest city in the United States, has numerous apartment homes for anyone wanting to lease. One question that many people ask, especially in this type of economy we’re in, is how one can be approved for an apartment without necessarily showing proof of income. For many complexes in the sprawling city, having a job is a major prerequisite to being approved. Not only does one need to have solid employment, but one needs to be earning enough to afford the monthly rent. Those who are jobless are therefore at a major disadvantage when it comes to being approved. But is there a way to actually get approved in Houston even without a job?

A few places where you can rent without a job

  • Westchase District
  • The Heights
  • Mission Bend
  • Katy
  • Alief

Navigating joblessness when applying

We have seen that in Houston, renting an apartment involves being able to prove both income and employment. Many apartments actually go to the pain of verifying and this is usually done by a simply phone call to an 800-number or asking for original paycheck stubs or tax returns. Unfortunately in this economy, there is a sizeable chunk of apartment applicants who are without gainful employment.

One of the best ways to get approved for an apartment if you are indeed jobless is to have a co-signer. This is someone in good standing in the community who can attest that they know you and are willing to vouch for your authenticity. Some apartments will approve on the strength of this alone but some will insist on additional information.

Another layer of qualifiers that you can possibly provide is a list of your assets. If you own any property that brings in income, for instance, a rental property, you can show this as proof of income. Some apartments will take this in addition to having a co-signer.

A last and final step you can take to get approved in Houston without a job is to offer to pay a deposit. In addition to a deposit, one can also offer to pay 3 months of rent in advance and also show that they are actively looking for a job. This gives the leasing management the impression that the tenant will find gainful employment soon.

Remember that even after providing all this information, it is still the apartment’s discretion to rent to you or not. Some might also conduct credit checks and background checks to make a determination.


Choosing a Licensed Vacation Rental: Why It’s Wise to Rent From an Established Local Rental Agency

Vacation rentals offer a great value to travelers and have become increasingly popular as travel accommodations. This trend has been driven by the plethora of unsold homes and condos in this economy coupled with the rapid proliferation of mega vacation rental websites such as HomeAway, where property owners can advertise and rent out their own houses.

Some mega vacation rental website ad campaigns poke fun at hotel rooms and point out the many advantages of renting private houses that include more space and privacy, a better overall value and a chance to experience living in a local neighborhood. Plus, property owners can help offset the expenses of their property by renting their properties to vacationers. These advantages are true, but there are some important ‘buyer beware’ issues pertaining to local licensing and rental restrictions that have been overlooked in vacation rental news. Bottom line is that it’s wise to rent a vacation rental property from an established locally operated rental agency with representatives that know the local regulations and are familiar with the local residential neighborhoods. Let’s take a brief look at why and consider these issues.

Many communities throughout the U.S. and in Europe have very specific licensing restrictions and laws regarding offering a private home as vacation lodging. If a property is not properly licensed to rent ‘short-term’ as a vacation rental, or is located in a neighborhood where vacation lodging is not allowed, it can actually be illegal to rent the property on a short-term basis.

There are some incidents where property owners who advertise their homes as vacation rentals on mega websites such as HomeAway and Craigslist, have been unaware of or chosen to ignore local laws restricting vacation rentals. They advertise and rent their properties anyway, hoping to go undetected. Some tourist communities even have code enforcement departments where officers look for violations by reviewing websites and in extreme cases, where neighbors have complained, they actually visit occupied houses to determine if an illegal rental is in process. Unfortunately, in a situation like this, an unknowing tourist who has rented the illegal house, can become a third party to unknowingly breaking the law. There have been instances where guests have actually been evicted from the property they rented in the middle of their vacation, and property owners have wound up in court for violating regulations that result in hefty fines.

At first it may seem unbelievable or unreasonable that there are local ordinances and laws that restrict property owners from offering their houses to vacationers. Some insist restrictions are a violation of property rights. However, the general intent is to protect and preserve residential neighborhoods where full time residents have been disturbed by a ‘revolving door’ of renters who show up in their neighborhood for short periods of time to party. In many communities, such as Key West, Florida, legal vacation rental properties must have a short-term rental license issued from the City.

Another issue to keep in mind is that in most communities, property owners or agencies who rent private properties as vacation rentals are obligated to collect a state sales tax and often a county bed tax from the guests just as hotel / motel lodging is required to do. If this tax is not collected from the guests renting a property, it is a good indication that the property is being rented illegally.

With these caveats in mind, private vacation rentals are still an excellent value for tourists. Families can stay together and enjoy more space, more privacy, and often times luxury amenities such as swimming pools and Jacuzzi tubs. Money saved by renting a house can be spent in the community on dining out and fun activities, and that becomes an economic boost for the communities.

One way for travelers to be sure their investment is protected is to rent from an established licensed and locally operated vacation rental business with representatives who know the community and the local regulations and laws. An excellent Key West rental agency with premium private island homes can bee seen on-line at


Rent to Own – Lease Option Your New Florida Home – Scam Alert – Part 9

Pablo and Arlene of Orlando, Florida, thought they had found the perfect home and the perfect opportunity to own their own home.

They desperately wanted out of the rental rat race.

And they needed to move quickly.

To get the keys to their new dream home, they had to come up with a $ 1,500.00 per month payment and $ 5,000.00 down payment.

It was a dream come true … or so they had thought.

Something convinced them to make one more phone call just before they were to sign the contract.

Pablo and Arlene are the lucky ones.

They are more fortunate than many other families disovering only too late a common rent-to-own home scam taking place in Florida.

The sleazy trick is for scammers to advertise a ridiculously low monthly rent payment on a home being offered with rent-to-own terms.

They know your credit and financial situation will not allow you to afford the home once you attempt to get the home in your names at the end of the lease term.

However, they do not care about you or your family. They want some money to cover their expenses, knowing they will get the home back when the market has improved and they can sell the home at retail or cycle another family through the home.

Some scammers put numerous families through the same home, setting one family after another up for failure.

They know you cannot afford the home at the end of the lease term.

For Pablo and Arlene, their dream home involved a Future Purchase Price of $ 339,000; a Monthly Rent Payment of $ 1,500; and a Non-Refundable Option Payment of $ 5,000.

What? A $ 1,500 / month rent payment on a $ 339,000 home? That's crazy!

How crazy? Let's take a closer look at just how dangerous and disappointing this scam really is. And let's really show just how criminal this scam should be by showing what a person with "A" credit (at least a 720 Beacon) would pay for a home priced at $ 339,000 with the following criteria:

==> "A" credit (minimum 720 Beacon)

==> 100% with only $ 5,000 option payment

==> Scenario does not include:

Taxes (~ $ 250 per month);

Insurance (~ $ 100 per month;

Homeowner's Association Fees (~ 50 per month)

Total = $ 400 per month + payment = Total Monthly Payment

The LOWEST possible monthly payment for a person with "A" credit is $ 2,040.00 + $ 400.00 = $ 2,440.00 per month payment (interest only).

This monthly payment reflect a 39% INCREASE!

Do you think Pablo and Arlene could suddenly afford an additional $ 940.00 per month increase in their monthly payment … a 39% increase! Worse, they do not have "A" credit. They would pay even MORE!

This is not right.

This is how we define SCAM!

Sadly, Pablo and Arlene could not confirm whether the $ 1,500 per month payment quoted actually includes taxes, insurance, and homeowner's association fees.

They didn't know.

While you make on-time monthly payments and maintain the property, the scammers know you will not be able to get the financing and / or afford the monthly payment when you attempt to get the home in your own name.

Please do not commit financial suicide. Do not allow the scammers to scam you.

Get a mortgage specialist or loan officer to assist you in forecasting your future payment before signing any rent-to-own paperwork.

Confirm you can AFFORD your dream home, and please do not get caught up in a home you cannot afford just because somebody is offering it to you.


Deciding to Rent Your Home – Apartment Rentals Decision

Many people prefer giving their homes as apartment rentals these days. With holidays and festive occasions around, people tend to move out of the home and travel around. However, leaving the home empty during these times is not a good idea. In such cases, giving up an advert for apartment rentals NYC is a great idea if you stay in NYC.

The Compensation
More often than not, it is the compensation or the rent amount, which entices people to give their home for apartment rental West and Central Village. Any person would not want strangers stay in their home unless it was not for a good reason. With the prices of apartment rentals going up, especially in NYC, it is best to get a piece of the action from the booming NYC real estate segment. What is the trivial inconvenience of having someone around when you know the end of the month will bring you a fat check?

Can Be Enjoyable
While most persons looking to give apartment rentals can be daunted at the prospect of having someone stay at their home, it is not as bad as it seems. After all, this new person or family will not remain a stranger for long. You will eventually get to know them and things will improve certainly. If you have a gut instinct that your prospective tenants will be easy to get along with, you might actually enjoy their company!

Choose Tenants Wisely
It is always a good idea to select your apartment rental tenants wisely. You do not want random, drug addicts or bad influences around you or your family. Hence, always take the time to choose tenants properly as it will go a long way in avoiding unpleasantness down the road. However, bear in mind that in NYC several laws exist, which curb the amount of freedom you have to choose your tenant. However, you can consult with a lawyer to find loopholes you can sneak your way out of.

Tax Worries
Many people wanting to give their home on rent and are scared about the associated tax rates. However, this is not as complex a matter as it seems to be. It basically boils down to deducting the overall expenses from the income you get out of the Morningside Heights apartment rentals.

Takes Time
Just as you might be having concerns about having a new tenant occupy your apartment rental, the tenants may also be a little daunted about helping themselves to the home or making themselves feel like they are home. They do need encouragement and so it is not like tenants are those horrifying people they are made out to be.

Setting Examples
If your family and you are clean and maintain the apartment rental well, your tenants will most likely follow suit. If you set a proper example, you can expect your tenants to clean up afterwards as well. Hence, there is nothing much for you to worry about in this respect.


Upside Rent Potential – Panning For Real Estate Investing Gold

Real estate investment decisions are made on the investor criteria. Unless the rental property serves some other purpose, perhaps to close a 1031 tax exchange in a hurry, capitalization rate, internal rate of return, cash on cash return, or some other factor or combination of all factors, tell the real estate investor whether to make the investment or walk away. Real estate investing, after all, is all about the numbers.

There is, however, the matter of any “upside rent potential” associated with the income-producing property that prudent real estate investors should consider before making investment decisions. This is not always the case, though. Remarkably, there are times real estate investors pass on good investment property opportunities because they fail to consider the potential of a property’s upside in rental income adequately.

An income property with “upside rent potential” simply implies that its rents are lower then what the market will bear and the “potential” to collect higher rents and generate more income are a real possibility. To the real estate investor analyzing the income property it means, “hold on, and don’t make any decision to pass on the property until you’ve reevaluated the cash flow based on several other rent scenarios”.

Believe it or not, sellers (or their agents) sometimes, whether by neglect or faulty research, do fail to consider the property’s true income potential when setting a price. If so, then any APOD, Proforma, Marketing Package, or other income and expense statement presented you, at the very least, distorts the income and every key rate of return guiding your investment decision. If unchallenged, and you rely on those numbers, and deem them unfavorable, you could pass up a good investment opportunity. It happens.

Always conduct your own rent survey. Know what comparable rental properties in the area are getting for rents and then make your own evaluation of what the market will bear. You might uncover something the seller overlooked, or perhaps discover that the seller set the price for the property with no consideration for upside rent potential at all.

Then run your own numbers. Using the rents you regard more in line with the market, recalculate the investment property’s cash flow, cap rate, cash on cash, internal rate of return and other financial measures. Who knows, you could discover a nugget of a deal you might otherwise have missed. It happens.


Interim Rent: Equipment Leasing’s Trap Door

Many lessees enter into lease transactions that they believe are competitive based on faulty rate assumptions. Most lease rate calculations don’t take interim rent into consideration. Interim rent is the trap door that allows lessors to receive increases in lease pricing. It is unpredictable and the amount can be arbitrary. By understanding how interim rent can impact your lease, you can close this trap door and enjoy the lease pricing you thought you negotiated.

What is Interim Rent?

Interim rent, also known as stub rent, is the rent that a lessor charges a lessee from the time the lessee accepts the leased equipment until the official lease start date. Most leases start on the first day of the month following equipment acceptance. In a lease with monthly payments, interim rent is calculated as follows: multiply the number of days in the interim period by the monthly payment amount and divide the product by 30. In the extreme case, interim rent can add almost a full periodic payment to the lease. In these cases it lifts the effective lease rate dramatically.

The impact of interim rent in the extreme case can be seen in the following example: assume you accept a 36-month lease for equipment that cost $100,000. Also assume that the monthly payment is $3,113 per month, paid on the first of each month. Assume that the lease allows you to acquire ownership of the equipment for $1 at lease end. Therefore, your effective lease rate is 8%.

Now assume that the interim lease period is 29 days. For simplicity sake, we will round the period to a full month and add it to the lease. The new effective rate for 37 payments of $3,113 is 9.7%. The new rate is more than 20% higher than the rate originally quoted by the lessor. This higher rate represents a trap door in your lease that produces more cost for you and a higher return for the lessor.

The Purpose of Interim Rent

Many lessors justify interim rent as compensation for obligating themselves to pay equipment vendors on behalf of lessees in connection with lease transactions. As further justification, these lessors point out that lessees have use of the equipment during the interim period.

Problems with Interim Rent

There are two flaws in the reasoning offered by these lessors. First, interim rent is exorbitant since it is based upon the periodic lease payment instead of the lessee’s borrowing rate. Since each lease payment has a return-of-capital component, the periodic payment is not an appropriate standard to use for interim rent calculations. A calculation based on the lessee’s borrowing rate is probably a fairer measure.

The second flaw in this reasoning is that lessors often have not paid for the equipment during the interim period. They may not have incurred any additional cost during this period. The net result is that lessees incur significant increases in their effective lease rates while lessors are able to sneak extra yield through a trap door in the lease. Interim rent can turn a competitive lease into a relatively high rate transaction.


Savvy lessees look for ways to limit or eliminate interim rent. They try to ensure that they receive the lease deal for which they bargained. Here are five strategies to blunt the impact of interim rent:

1. Eliminate interim rent. Try to negotiate a lease that excludes interim rent. One way to eliminate interim rent is to have the interim period count as a partial payment period. Another partial payment period can be added at the end of the lease, such that the two periods constitute one full payment period.

2. Pay interest instead of interim rent. Instead of paying interim rent based upon the periodic payment, base the interim payment upon the implicit transaction rate or your borrowing rate. This method will eliminate the return-of-capital component that plagues most interim rent calculations.

3. Limit or fix the amount of interim rent. If you cannot eliminate interim rent, you can try to negotiate a limit on it. You can offer the lessor a fixed interim period, regardless of the equipment acceptance date.

4. Manage equipment deliveries. Another strategy is to coordinate with the equipment vendor to schedule equipment delivery and acceptance towards the end of the month. End-of-the-month acceptances would ensure a reduction in interim rent since the interim periods would be short.

5. Sale-leaseback at month end. As a last strategy, if allowed by the lessor, you could schedule a sale-leaseback of newly acquired equipment at month end. This strategy would also guarantee a short interim period.

It is important to understand the impact of interim rent on your lease. Rather than assume that you will receive the lease rate quoted, review the lease carefully. If your lease includes interim rent, plan to negotiate this feature. Use one of the strategies above to reduce this potentially costly aspect of your lease. Even if you cannot eliminate the interim-rent trap door, you may be able to seal it.