properties are investments not a business??

[underdog13]

I lost my job due to the current recession. I own a rental property that does not produce much (if any) profit and therefore does not provide me with an income.

 

My local council is claiming that anyone who rents out property does not conduct a business, but merely holds an investment and are denying my claim to C Tax benefit because of this.

 

If it is an investment and not a business, why do you have to register a rental business, make annual tax returns and pay company tax not capitial gains tax?:?

 

To my mind they are twisting the situation to suit themselves and deny people on low incomes claiming council tax relief.

 

Any ideas as to how I can fight this?

[cds]

Why did you register as a rental business the inland revenue does not recognise you as such until you have several properties not sure how many but am sure its more than one. With one property you shoudn't pay company tax just fill out land and property part of the self assessment form and pay CG if applicable when you sell it. Rental income is classed as unearned income.

Council tax benefit is not paid to applicants with investments of over £16,000.

I've been in this situation on occassion over the years and there is no way round it.

 

cds:cool:

[underdog13]

Thanks for the reply, cds.

 

What if the equity in the property is less than 16k?

[cds]

Not applied for it for years but pretty sure the appl doesn't ask about equity just value. In which case it would seem to me it is irrelevant to the claim.

 

cds

[Emma1973]

Theres no way to fight it, the rules are fairly clear. Income from rent on property let to tenants is treated as capital. The capital in the property will be too much for you to be entitled to CTB.

[cds]

Theres no way to fight it, the rules are fairly clear. Income from rent on property let to tenants is treated as capital. The capital in the property will be too much for you to be entitled to CTB.

 

I think that makes it unanamous then (never could spell that word)

[underdog13]

Theres no way to fight it, the rules are fairly clear. Income from rent on property let to tenants is treated as capital. The capital in the property will be too much for you to be entitled to CTB.

 

Even if the property is in negative equity and the rent only covers the mortgage payments?

[DCA-KING]

Hi do you have any kids you could put the house in there names so technically u dont own it

[underdog13]

That's a great idea, DCA King, but I don't have any kids.

[Emma1973]

I think you'd have difficulty proving to DWP that signing over the house to the kids isnt a serious deprivation of capital!

 

Yep underdog thats the case, otherwise think of the amount of people who could claim! Think of other landlords who may have several properties who in the current climate may be only receiving enough rent to cover their mortgages, should they be entitled to claim means-tested benefits?

 

And its really not the DWP's fall that the rent doesnt cover the mortgage, entitlements have to end somewhere, and its usually at those with capital!

[underdog13]

I don't have any kids, Emma - as previously stated; so not relevant.

 

Agree that councils and DWP will seek to stop anyone claiming relief that they can possibly block - even if they have no income and no capital:cool:

 

Means tested benefits? By its description, would have thought that applied to people's means - less incoming than outgoing!?! But hey, to h*ll with you, you property owning b@**~/% - even if the property is in negative equity and you cannot sell.....

 

I could have umpteen kids and be seeking rent, C tax and FTC and they'd be falling over themselves to give me money. Need a lot of help (and funds), you'll get it: need a little help for a short amount of time - forget it!

Edited May 21, 2009 by underdog13

[underdog13]

Yep underdog thats the case, otherwise think of the amount of people who could claim! Think of other landlords who may have several properties who in the current climate may be only receiving enough rent to cover their mortgages, should they be entitled to claim means-tested benefits? Wasn't enquiring about other landlord's positions - was seeking some help and information for my own problems; not a sanctimonious lecture:cool:

 

And its really not the DWP's fall (assume you mean fault)that the rent doesn't cover the mortgage, entitlements have to end somewhere, and its usually at those with capital! Don't have any capital - property is in negative equity, as previously stated.

 

Thanks for your help and understanding, Emma - do you work for the DWP, by any chance?

[Andy S]

Surely there is a simple answer here.

 

Set up a limited company and transfer the title deeds of the property into the name of that limited company.

 

You don't technically 'own' it so would still be entitled to full ctb/hb based on your income.

 

HTH

 

Andy

 

PS: Going through same stuff as you mate. Maybe I'm wrong but I don't think so.

[underdog13]

Many thanks, Andy:)

[Emma1973]

I found this situation quite interesting so double checked with someone who is a HB/CTB trainer so knows the ins and outs of everything! And he said:

 

The Council would still take it into account as "notional capital" on the grounds that the capital has been disposed of with there being a "significant operative purpose" to obtain / increase CTB.

 

In short, you set up the company in order to dispose of ownership of the house just in order to claim CTB and it will be turned down!

 

And no, I dont work for the DWP, I'm a Disability Benefits Advisor, tenant advocate and Landlord, so I do understand the frustrations at this, and if there was anyway around it I would tell you!