Property income Ch 14-15 Flashcards
(43 cards)
When is cash basis used?
When gross income does not exceed 150k (time apportion for shorter periods i.e if property business started part way through the year)
When must election to use accruals basis be made?
31 Jan following the first anniversary of the end of the tax yr (31 jan 2025)
Do both couples have to be taxed on the same basis?
If they have made an election to be taxed in line with beneficial entitlement than NO, otherwise YES.
Can expenses be apportioned for private use?
Yes
What can be deducted in respect of motor expenses?
Actual expenses, or can do the usual flat rate charge (if they do flat rate, must do this consistently year on year)
replacing standard glazing with double glazing?
Repair!! due to changes in technology is now seen as the standard so isnt an improvement
under the cash basis, when is relief for acquisition of P&M given?
When first acquired (apart from cars-can claim CA on them)
when is there relief for the initial cost of domestic items?
FHL
Relief for domestic items purchased when residential let?
When replaced (should not be enhancing). If it is enhancing, then relief limited to cost of item that would be considered substantially the same. No relief where there is an element of private use.
When is interest relief carried forward?
When the relief is NOT the interest (i.e is property income profit OR adjusted total income at 20%).
When loan partially used for private purposes?
That part is not eligible for relief.
Exception to the loan partially for private use rule?
When the loan is first introduced into the property business. (eligible for full relief provided the loan does not exceed the capital introduced).
What is the statutory restriction to interest relief under the cash basis?
interest paid x value of property when first brought into the business/total outstanding business loans
What must happen if there is a change in method used to determine property profits?
Will be adjustment income or adjustment expense so that things arent taxed twice. This is spread over 6 yrs (where moving from cash to accrual basis and there is adjustment income) BUT election can be made to accelerate this.
What happens to UK property business losses?
They are pooled
What is not an allowable loss?
Loss on nominal lease where the landlord does not charge full rent.
When does rent a room relief apply automatically?
When rents <7500
When should rent a room relief be elected for/elected to NOT have?
First anniversary of 31 Jan following tax yr
Rent-a-room relief if property jointly owned?
Half it
How much is property allowance?
1k
When is property allowance not available?
-If they have de-elected for rent a room relief but qualify,
-Income from close co in which they are participator,
-Income from ER,
-Income from firm which they are partner
(preventing people from aritficially creating income).
Can you still get the interest relief tax reducer if the business is loss making?
YES if one portion of the income is loss making (i.e that specific property) NOT if loss making as a whole property business (if so C/F)
What is an overseas property business?
A separate business for losses and for determining accruals/cash NOT for property allowance purposes.
Is FHL a separate business for loss and basis purposes?
NO- BUT losses from an ordinary property business can be set off against FHL income but not the other way round.
