Surely they meant this: - the property is NOT disregarded but, under Reg.49, IS Regs, if the mortgage or other incumbrance secured on it exceeds the current market value, then its value is nil - because it isn't disregarded (but instead has nil value) income from it is treated as capital under Reg.48(4), IS Regs.
So it should work as long as you don't save up the income or otherwise run up against capital limits. Could have been better expressed though.
Richard Atkinson
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