| Many people rent out part of their home -
whether to an individual or to a business. There are a number
of tax implication of doing this which must be considered. Remember
that tax relief on interest on loans to buy your home has now
been abolished (ie MIRAS).
Under the "rent a room" scheme the income from this
type of letting will be tax free provided the income of letting furnished rooms
does not exceed £4,250 per annum (gross).
There will be no loss of capital gains exemptions for lodgers
who live as part of the family.
Remember: Your main residence is exempt from capital gains tax
when you sell it - provided it has been your only or main residence for the whole
period of ownership since 31 March 1982.
The "rent a room" scheme still applies.
If you use part of your house ONLY for business and no other purpose
then interest on the relevant amount of borrowing is allowed as a business expense.
A similar proportion of the capital gains exemption will
be lost if this interest is charged as a business expense. If the rooms are not
exclusively for business purposes then the full exemption will normally be preserved.
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