Tax and your property

1. The next time you move house, you could let out, rather than sell, your old home so that the rent covers the mortgage interest and other expenses. This may be particularly appropriate given the current uncertainties in the property market. When you eventually sell this property, the proportion of the gain relating to the period when it was occupied as your main home will be exempt from tax. In addition, you can claim a further tax exemption of up to £40,000 per owner because the property has been let. With the benefit of all these reliefs, you might find that the gain on the let property is less than your capital gains exemption, so is tax free. Any remaining gain will be subject to CGT.

2. Pass on a let property to fund future income needs. Students need an income stream and a let property can provide that. The gift of the property is treated as a sale at market value for tax purposes. But where the current value is low, the gain will be small and may be covered by your annual exempt amount of £10,600 (for 2011/12).

3. Keep your tenants warm and save tax at the same time. As a landlord, you can claim a special tax allowance of up to £1,500 per property, giving you immediate tax relief for your expenditure on energy-saving insulation. This includes loft, wall, floor or hot water system insulation installed in residential properties. This is a one-off allowance for expenditure made before 6 April 2015.

4. Let rooms in your own home. The income is completely tax free up to £4,250 per property. If the rent is higher than this, check whether the normal approach of paying tax on the income after deducting allowable expenses is more tax-efficient than claiming the exemption of £4,250