Property income Flashcards
Property allowance
£1000
When used, no relief is available for allowable expenditure or finance costs
Cash basis
Used when property receipts < £150,000
Rental receipts
- allowable expenditure paid
Allowable expenses
Legal, professional and administrative costs
Interest paid
Taxes paid by the landlord
Ancillary services provided by the landlord
Property insurance
Replacement of furniture and furnishings
Repairs and maintenance
Fixed rate reductions for motor vehicles used in the property business
Accruals basis
Used when property receipts > £150,000
Rent receivable
- allowable expenditure payable
Capital allowances
Only available on the cost of plant and machinery used for the repair or maintenance of the property
Replacement relief for domestic items
Landlord can treat the cost of replacing domestic items as an allowable expense
Only the cost of a replacement is allowed
Amount of deduction = replacement cost - proceeds from sale of old item + cost of disposal of old item
Finance cost relief is given as a tax reducer of 20% of the lower of…
Finance costs for the year + any brought forward
Property income for the year
Adjusted total income
Finance cost carried forward
Finance costs - property income 5
Property losses
If a loss arises, there is no taxable property income in that tax year
The loss is carried forward and set against the first available future property income
Rent a room relief when rental income <=£7,500
Income and expenses arising in relation to the letting are ignored for income tax when rental income <=£7,500
When rental income > £7,500, election can be made to set allowable expenditure at £7,500
Rent a room relief when rental income > £7,500
Normal property income rules usually apply
Alternatively the taxpayer can elect to be assessed under the rent a room rules on the gross rents in excess of the rent a room limit of £7,500
Rent a room relief where two or more people share a home
Always £3,750 regardless if there are more than two co-owners
