INTRODUCTION TO PROPERTY INCOME Flashcards
how to calculate property income - what basis
cash basis if income from property less than £150,000. otherwise use accrual basis
how are motor expenses re property income treated
choose between propertion of motor expenses
or
flat rate expense for business miles + incidential expenses like parking charges
how to treat provision of furniture in property rental
capital expenditure
how to treat provision of white goods in property rental
capital expenditure
how to treat replacement of bath in property rental
revenue expenditure
how to treat insurance policy proceeds covering cost of repairs to a kitchen after a flood in a property rental
the cost in excess of the insurance proceeds is allowable as revenue expenditure
how to treat addition of integrated microwave to kitchen replacement in property rental
if no integrated microwave before then this is capital expenditure
if previous integrated microwave then this is revenue expenditure
how are cars treated re property income
must use capital allowance
how is initial cost of furniture and domestic items (ironing board) treated with property business
no tax relief given (unless furnished holiday let. use capital allowance for accrual basis or simply cost for cash basis)
how is the replacement of domestic items treated for property business
replacement of existing items attracts relief - but only up to a figure of comparable item - and not available for furnished holiday lets
how is loan interest treated for property business
for residential property lets - 20% tax reducer -
lowest of
1. the interest
2. net property income
3. adjusted total income (net income less savings and div less personal allowance)
for furnished holiday lets - relief in full for interest - deductable expense
how to treat losses in property business
pool all properties across the business and give an overall net income.
if loss, then carry this loss forward but only set against future PROPERTY income.
how is initial cost of bath installation treated with property business
no relief (unless furnished holiday let where cost paid if cash basis or capital allowance if accrual basis)
what is property allowance and any restrictions?
“relevant property income” - less than £1000 per year - gross figure - before deduction of expenses - does not include rent a room as source of income.
how to treat income from property overseas
separate property business - cannot mix losses - and separate when choosing cash or accruals basis
how is capital expenditure on initial provision of domestic items such as furniture treated in property business?
for residential - no relief
for FHL - cost or capital allowance (accr.) deducted to arrive at net property income
how is replacement of domestic items treated in property business
relief for residential and fhl
how is capital expenditure on replacement of fixtures such as boiler treated
relief for residential and fhl
how is interest on loan to purchase property treated
for residential - 20% tax reducer
for fhl - deductable expense in coming to net income
how are pensions treated with regards to property business
for residential - not relevant
for fhl - relevant earnings for pension purposes
how are capital gain reliefs such as badr or gifting treated re property businesses
for residential - no relief
for fhl - relief allowed
how are losses treated for propery businesses
for residential - losses offset against current fhl and then future resi and fhl
for fhl - losses only offset against future fhl income.
what is time limit for long lease
50 years
what is income tax for long lease premium
none
