Rent recvd on property other than claimants home – capital

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  • #31933
    Janillou
    Participant

    I understand the capital calculation for working age claimants who rent out a property. However, we have a claimant who owns the 2nd property, but as part of her divorce settlement, the ex husband pays the mortgage.

    Does it matter as to who pays the mortgage – surely in deducting any outgoings incurred in respect of the letting – mortage etc this could include the mortgage paid by the husband.

    Or is it that as she receives the ‘full’ rental income we cannot deduct the mortgage payment?

    When she comes to sell the property, obviously she will not get the full market value. She will only get the market value, less outstanding mortgage (which the husband is now paying)

    #89321
    Kay_Tade
    Participant

    [quote:179f7f2c78=”Janillou”]Does it matter as to who pays the mortgage – surely in deducting any outgoings incurred in respect of the letting – mortage etc this could include the mortgage paid by the husband.[/quote:179f7f2c78]

    If she does not [u:179f7f2c78]incur [/u:179f7f2c78]any expenses I can’t see how you will be making any deductions.

    #89322
    Anonymous
    Guest

    Sorry, can you clarify: are you disregarding the capital value and taking rent from tenants into account as income? Or are you taking the value of the house (less mortgage) into account as a capital asset?

    If you are using the capital value, you don’t have to worry at all about regular mortgage outgoings.

    #89323
    Anonymous
    Guest

    This seems quite a one-sided settlement… claimant gets the property and the rental income, but the ex pays the mortgage? 😮

    As Peter says, assuming the property is not disregarded, you don’t need to worry about any mortgage, the rent becomes capital as and when it arrives in the claimant’s bank account. If she doesn’t have any outgoings this may accumulate quickly so you might want to keep an eye on it.

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