Property Income

Question 1

Tax relief on finance costs:
20% x what

Answer 1

What= the lower of:

Finance cost in CY + bf finance costs

Property business profits

Adjusted total income

Question 2

What is adjusted total income

Answer 2

Adjusted Total Income = Total taxable income – gross Gift Aid donations – gross pension contributions

Used to compare against PA too

Question 3

What is property business profit

Answer 3

Profit from property CY less any losses bf

Question 4

Finance cost relief is only for what type of finance costs and how is it applied?

Answer 4

Residential finance costs,

Applied as a tax reducer (deducted from tax bill)

Non residential finance costs are a fully deductible expense.

Question 5

How much is the property allowance

Answer 5

£1k

Can use expenses instead

Question 6

What basis is property income calculated on?

Answer 6

Cash basis.

Can elect for accruals basis.

If rental income is above £150k then have to use accruals

Question 7

Allowable expenses:

When allowed

Answer 7

Insurance
Legal and professional fees
Mortgage interest relating to NON residential properties
Rates and taxes paid by landlord
Cleaning, gardening
Decorating, painting
Fixed rate deductions for cars (if no CA claimed)

Only for the period when available for rent/rented out.

Question 8

Capital expenditure

Answer 8

Can claim CA on:

Plant and machinery used for repairs or maintenance.

Cars, unless fixed rate mileage allowance claimed.

(Not for p+m used in the property)