Chapter 8 - Property Income

Question 1

Intro

Answer 1

Income from UK situated property is taxed on companies as profits from UK prop business.
Income from overseas property is taxed as overseas property business.
Income from all UK property is a single source and the profits and losses are pooled together.

Question 2

Expenses

Answer 2

Relief given for expenses incurred wholly and exclusively for the prop business.
Common deductibles are:
- maintenance and repair expenditure (NOT improvements)
- insurance
- management/agent fees
- rent collection costs
- advertising
- replacing domestic items
- capital allowances on domestic items in a FHL

Question 3

Loan Interest

Answer 3

Interest on a loan taken out to purchase a rental property is not an allowable expense

Question 4

Real Estate Investment Trusts (REITs)

Answer 4

For UK REITs, qualifying rental income and gains on disposals of investment properties are exempt from CT.

Question 5

REIT Dividends

Answer 5

Dividends paid out of tax exempt property income or gains will be treated as UK prop income in the hands of the shareholders.
Where a shareholder is a company, it will be treated as UK property business income and is received gross.

Question 6

Misc.

Answer 6

UK property business income is taxed on the accruals basis.