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income from rent
i have a client who is looking to give up work to care for her mother. She owns a property that she lets out. The income from this is £500 per month which covers the mortgage plus almost the cost of loan repayments. She actually lives with her mother in her mother’s house. From the CPAG book it looks like the rent would be treated as capital. so presumably that means that the value of the property plus the rent counts as capital which would obviously be above £16,000 so that would mean no means tested benefits. have I understood this situation correctly?
Income from capital (unless disregarded under paragraphs 1, 2, 4, 6, 12, 25 to 28, 44 or 45 of Schedule 10 to the Income Support (General) Regulations) is treated as capital.
If total capital (including value of property after 10% for expenses of sale and any encumbrance secured on it) is over £16,000, your client won’t be entitled to income support.
If the total value is less than £16,000, she will not be disentitled by virtue of her capital, although there may be a tariff income. However, if she gets £500 rental income, that would be treated as capital. The actual amount of capital would be affected by payment of her mortgage, presumably.
[ Edited: 2 Nov 2011 at 01:41 pm by Brian JB ]Income from rent used to pay the mortgage would be ignored. Any excess of rent left counts as income
Sorry if I was getting the wrong end of the stick Duncan, I just wanted to point out that excess of income after mortgage paid off would not be income, unless capital value of property already disregarded
Cheers
Brian