The Earl of Selkirkasked Her Majesty's Government:
Why the income and expenses from two separate rented properties in the same house cannot be aggregated for taxation purposes if one is furnished and the other unfurnished.
§ Lord Young of GraffhamTax law distinguishes between income from letting real property and income from letting other assets, such as furniture. However, the general rule is that all the income from letting furnished property is taxed on the basis applicable to the furniture; and that will clearly be more convenient for the landlord in most cases. But if a landlord wishes, he can elect to have the income and expenses attributable to the real property separated out from those attributable to the furniture and aggregated with any other income and expenses from unfurnished letting, whether in the same house or elsewhere. If the noble Earl has a particular case in mind, I would be very happy to ask my right honourable friend the Chancellor of the Exchequer to look into the matter.