Where a property is located in a holiday region, a consideration will be whether to let it as a holiday let or on a longer-term basis. As well as differing rental income profiles, there are tax differences to consider.
The cash basis simply takes account of money in and money out – there is no need to worry about debtors and creditors and prepayments and accruals. Income is recognised when received and expenditure is recognised when paid.
Where property is owned jointly by two or more people, the way in which any income is taxed will depend on the relationship between the owners.
By making the most of the rent-a-room relief and the £1,000 property income allowances, it is possible to receive tax-free rental income in 2018/19 of £8,500 (while utilising your personal allowance elsewhere).
With rising property costs and low interest rates, many people took out a mortgage to invest in a buy-to-let property. As long as property prices continued to rise and the tenants paid their rent, investors could make money from the rising market while the rent from the tenant paid off the mortgage
The situation where a married couple or civil partners jointly own an investment property that they let out is a familiar one, but when it comes to the rental income, special rules apply.