If you let your property to several tenants who are not members of the same family, it may be a ‘House in Multiple Occupation’ (HMO).
Your property is an HMO if both of the following apply:
- At least 3 tenants live there, forming more than one household
- Toilet, bathroom or kitchen facilities are shared
You would need an HMO Licence if there are five or more tenants from at least two living within HMO.
Cash basis is generally used for most property income by individuals or partnerships whose income is £150,000 or less for a tax year.
For companies, rental income and expenditure is assessed as trading income, and the same tax treatment applies to HMO’s and multi-lets. However, property businesses must calculate their profits in accordance with Generally Accepted Accounting Principles (GAAP). In other circumstances, property businesses can elect to use GAAP (rather than cash basis).