Is a loss of rent insurance payout treated as taxable income

by Readers Question

6:41 PM, 8th May 2014, 12 years ago 7

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Landlord News Landlords Questions

We recently received a payment for loss of rent at a property after a fire made it uninhabitable.

Should we declare it on the accounts as income?

Thanks

Mike

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Comments

Mark Weedon

Member Since April 2014 - Comments: 36

6:45 PM, 8th May 2014, About 12 years ago

Hi Mike

I’m not an accountant but because it’s replacing the income you would otherwise have received I would say yes.

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Bill Marriott

Member Since April 2014 - Comments: 4

7:11 PM, 8th May 2014, About 12 years ago

I had a similar claim and I checked this with my accountant. It needs to be declared.

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Jonathan Clarke

Member Since June 2013 - Comments: 582

7:54 PM, 8th May 2014, About 12 years ago

Yes

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Sally T

Member Since July 2013 - Comments: 128

10:22 PM, 8th May 2014, About 12 years ago

If you had to pay to rehouse your tenant you would put that in as a loss, so having a payment to cover income should surely go in as a gain.

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MdeB

Member Since July 2013 - Comments: 1434

11:09 PM, 8th May 2014, About 12 years ago

Yes.

See PIM1056

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Jeremy Smith

Member Since July 2013 - Comments: 282 - Articles: 2

1:10 AM, 9th May 2014, About 12 years ago

Yes, of course, but a good question.
You deduct the insurance premiums as a loss, so the payout is a gain.

But are ALL of the “major renovations” required after the fire also deductable ?
– I would think so, but you might be improving it over and above the condition before the fire – it will be “as new” perhaps, not just decoration.

I will be interested in other peoples views.

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MdeB

Member Since July 2013 - Comments: 1434

11:31 AM, 9th May 2014, About 12 years ago

Reply to the comment left by “Jeremy Smith” at “09/05/2014 – 01:10“:

Repairs are allowable if
a) it is like for like.
b) no added features/capabilities.

but the following are allowed
c) using modern materials with similar properties
d) minor improvements in capability or performance from use of modern materials.

see PIM2020

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