If we have a boarder with part of the board money going towards
electricity and water, do we have to pay tax on any of the board
received?
Q.
We have a granny flat which is attached to our house - it's
essentially another two rooms of our house. If we have a boarder in
there with part of the board money going towards electricity and
water, do we have to pay tax on any of the board received?
A.
In consultation with your accountant, you will need to decide
whether you wish to simply accept some money from a boarder to help
pay your outgoings, or whether you want to charge a formal rent
which will be taxable income and then claim a proprotion of the
outgoings as a tax deduction. If you adopt the second option, you
will lose part of the CGT exemption on the property.
Each week financial advisor Noel Whittaker answers your
questions.
