Capital calculation from property for Council tax reduction

gdw123

I understand a second property counts as a calculated income, based on the valuation.
However, what happens if the property has a second charge on it and is in negative equity?
Currently I have a second home jointly owned with my wife who is separated from me. She refuses to sell up and take the loss, so we rent it out and split the income as a stop gap. How is negative equity viewed for benefit calculations?

Alice_Holt

gdw123 said:

I understand a second property counts as a calculated income, based on the valuation.
However, what happens if the property has a second charge on it and is in negative equity?
Currently I have a second home jointly owned with my wife who is separated from me. She refuses to sell up and take the loss, so we rent it out and split the income as a stop gap. How is negative equity viewed for benefit calculations?

      I think there are 2 issues here:

     1)   Valuation of second property for capital limits                    
             https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/365782/hbgm-bw1-assessment-of-capital.pdf

     2) Treatment of your share of the rental for non-earned income.


   1)  I think if you can show a recent valuation / mortgage & secured loans showing the property is in negative equity - then it would have a nil value for the purpose of your savings / capital assesment. 

  2) Council tax reduction scheme rules are set by the LA not nationally, you will need to look at the details of your local scheme to see how rental receipts are treated.