Module 122 min2455 wordsFree — no account
What counts as rental income, when it counts, and rent between relatives
The module’s worked examples, then cases to attempt before revealing their solution · 2 sections · 228 words · 3 min
Worked example
Where the threshold lies in euros
If the local rent of a flat is 1,000 euros a month, any rent below 500 euros leads to a split. From 660 euros, a letting intended to last is deemed fully for consideration. Between 500 and 659 euros there is no split, but the intention to make a surplus may be examined.
Practical case
The flat for the daughter
Mr Brandl lets a flat on a lasting basis to his daughter for 420 euros a month, for twelve months. The local rent for the flat is 1,000 euros. His income-related expenses for the year are 7,500 euros. What is his income from letting and leasing? And what monthly rent would he have to charge at least for the letting to be deemed fully for consideration?
Hint: First determine the ratio of the rent to the local rent and compare it with the two thresholds in section 21(2).
Show the solution
The rent is 42 percent of the local rent, and so less than 50 percent. The letting is split: only 42 percent of the expenses are deductible, which is 3,150 euros out of 7,500 euros. Receipts are 12 times 420 euros, that is 5,040 euros. The surplus is 5,040 minus 3,150 euros. For full consideration, sentence 2 requires at least 66 percent of 1,000 euros.
Answer: Income of 1,890 euros; a monthly rent of at least 660 euros
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