Chartered Management Accountants | Milton Keynes
Tax relief is not available on interest for loans used to buy your home.
Under the rent-a-room scheme, income from letting furnished rooms in your home will be exempt from tax if the gross annual rent does not exceed £7,500 (£3,750 if the property is jointly-owned).
Income from agencies, such as Airbnb, qualifies for this income exemption providing you live in the house as your main home at some time in the tax year.
If you are letting to lodgers who live as part of the family, there will be no loss of capital gains exemption. Otherwise, there may be some restrictions.
Your main residence is exempt from capital gains tax when you sell it. Please seek our advice if you have not occupied the house as main residence throughout the period of ownership.
Various rules allow periods of temporary absence to be disregarded.
If you have more than one house
Partial use for business
Selling adjoining land
The main problem is that it is very difficult for a person to give away property but still continue to occupy it.
You could consider moving to a smaller home, creating a tax free gain that can be given away, or to reduce the value of the home by increasing the mortgage and giving away the proceeds.
Clearly these are drastic steps, and underline the fact that inheritance tax planning is better directed at assets other than the family home.
The residence nil-rate band is available to cover part of the value of the family home, or the proceeds of sale if the deceased had sold the property to “downsize”. However, the home or funds must be left to direct descendants (including step and adopted children).
Please contact us if you would like more help or advice in this area.
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