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Tax Insider Tip: Tax-Free Income For Letting Out Part Of Your Main Home

14th May 2014
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Now a less spectacular relief but well worth having is what’s known as rent-a-room relief.

If you decide to let a room in your main residence, you can receive a rental income of up to £4,250 a year and have no tax liability.

In order to claim this allowance, the property must satisfy the following conditions:
a)    you must also live in the property;
b)    the room you are letting out must be fully furnished; and
c)    it must not be a self-contained flat.

If you claim the rent-a-room relief, then it is not possible to claim any expenditure that you have incurred with regards to the letting.

This is a very common strategy for those people who have houses that are too large for their needs. For example, if your children have left home, then you may decide to rent a room they lived in for an additional tax-free income.

However, it is not always a good idea to claim this relief because you need to do the sums and check whether you have actually made a loss on the letting.
If you have actually made a loss then obviously you would rather claim that loss against possible future letting income than take advantage of the exemption.
Nevertheless, in most cases where you have let a room in your house to somebody then £4,250 is going to be a valuable exemption to claim.

This is a sample tip taken from our 136 page guide:
101 Ultimate Tax Strategies Revealed.

Click here to receive a free copy of this tax saving guide today!

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