Is a loss of rent insurance payout treated as taxable income

Readers Question by Readers Question
6:41 PM, 8th May 2014, 12 years ago 7
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Landlord NewsLandlords 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? Is a loss of rent insurance payout treated as taxable income

Thanks

Mike

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  • Mark Weedon Mark Weedon

    Member Since April 2014 - Comments: 37

    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 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 Jonathan Clarke

    Member Since June 2013 - Comments: 597

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

    Yes

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  • Sally T 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 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 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 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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