Property Income Flashcards
(16 cards)
what is the basis of assessment for property income
Cash unless over £150k then accrual
What are the allowable property deductions
Insurance
Finance costs
Legal and professional costs
Rates and taxes
Cleaning, gardening
Repairs and maintenance
Bad debts - accruals only
What is the treatment when the Landlord lives in property for part of the tax year
Time apportion expenses for when property is available to rent
What is the treatment for Capital expenditure for property income
Capital allowances on P&M used for repairs and maintenance
Motor vehicles used in the property businesses
What is the treatment for purchasing domestic items e.g beds
Initial expense - no relief
Cost of replacing them is allowable (reduced by process on old asset)
What is the treatment for Replacing domestic items
Relief available for a like for like replacement
No deduction for element of improvement (unless purely because of tech advancements)
What is the Finance cost relief calc
Based on 20% of the lower of
Finance costs for the tax year
Property business profits
Adjusted total income (ANI)
What is the Property allowance
£1k per tax year
When does the property allowance apply automatically
If the rental receipts are not more than the property allowance (£1k)
Property income will be £0 i.e allowance cannot create a loss
When should the taxpayer elect for property allowance
If rental receipts >£1k and expenses <£1k
When should the taxpayer not use the auto property allowance
When receipts less expenses creates a loss
What happens with property income losses
Loss is carried forward against first available future income from property
What is Rent a room relief
Lodger renting a furnished room in the main residence
What is the rent a room limit
£7,500 p.a
If gross income from rent a room is more than the limit, what should the landlord choose the lower of in the property income calculation
Choose lower of
rent a room relief (expense defaults at £7,500)
or
Normal calc (income less expenses)
What happens where two or more people share a home for property income calc
Rent a room relief is now £3,750 even if there are 3 or more co owners
