Income from Property and Benefits

canspendnomore

I'm not sure if I'm posting this in the right place, hopefully someone kind will move it if not.

My husband is currently on sick from his job as he has found it very stressful since starting a new job. He had a meeting this week and it has been agreed that they give him a months notice as he can't return but hasn't worked for them long enough to have any rights to redeployment.

We own a flat in addition to the property we live in which is currently let. I'm trying to calculate what benefits we might be entitled to but am confused by the income bit with regard to the rent we receive from the flat.

Should I state the income I receive is the rent I get, or do I deduct the mortgage and other associated costs first?

I would be grateful for a reply as I'm pulling my hair out here trying to get to grips with us being on benefits together with the financial mess we're already in.

Many thanks

HappyMJ

You need to figure out the value of it. Deduct 10% for sale costs then deduct the outstanding mortgage. What are you left with? If it's in excess of £6,000 then you will have deemed income of £1 per week of every £250 in excess of £6,000.

The rental income is unearned income only earned income (i.e from a job) is counted for benefits purposes.

canspendnomore

Oh I see, so the rent we get is irrelevant, it's only the income supposedly generated from the capital of the property?

That does make the figures a little better, but I don't see how we'll manage to pay the mortgages and a loan that's secured on our house.

Oh well, back to Budget Brain to play with the numbers!

Thanks

BigAunty

This link should provide info about how to calculate capital and also the formula described above to value the property.

http://www.dwp.gov.uk/publications/specialist-guides/technical-guidance/rr2-a-guide-to-housing-benefit/working-it-out/income-and-capital/

real1314

HappyMJ wrote: »

You need to figure out the value of it. Deduct 10% for sale costs then deduct the outstanding mortgage. What are you left with? If it's in excess of £6,000 then you will have deemed income of £1 per week of every £250 in excess of £6,000.

The rental income is unearned income only earned income (i.e from a job) is counted for benefits purposes.

Just for clarity:-

Unearned income is counted; however income from capital is not counted.

In this case the house would (most likely) be treated as a capital asset and would be assessed as described above.
:cool:

mikey_bach

if the rent paid to the the OP for the flat was more then the mortgage on the property then excess would be classed as an Income as well for IB benefit purposes

real1314

mikey_bach wrote: »

if the rent paid to the the OP for the flat was more then the mortgage on the property then excess would be classed as an Income as well for IB benefit purposes

No, it wouldn't. It would be income from a capital asset, which is ignored for Income Support, ESA(IB), HB, CTB, JSA(IB); where a means-test applies.

:cool:

von

Income i.e.the rent, from capital i.e. the property, is treated as capital unless the value of the capital i.e. the property, is disregarded e.g. it is up for sale.
If the value of the property can be disregarded for some reason (there are a number of different reasons) then the income i.e. the rent becomes income and is taken into account in the benefit (assuming it is a means tested benefit) after deducting the monthly mortgage repayment. The monthly Council tax and water rates can also be deducted from the rental income if the owner and not the tenant is liable for these payments
Simple? - that's the benefit system for you......