Property Income

Question 1

Cash basis vs Accruals basis

Answer 1

Accruals basis if income >£150k

Can elect to do accruals if below

Question 2

Allowable deductions

Answer 2

Wholly and exclusively relating to letting, finance costs as a tax reducer at 20%.

No relief on capital items except for cost of replacement furniture and applications

Question 3

Losses

Answer 3

Offset against current and future income

Question 4

FHL

Answer 4

Criteria:
Available for >210 days
Let for >105 days
Lets >31 days adding up to <155 days in total

Advantages of FHL:
Treated as a business, finance costs not restricted, relevant earnings for pension contributions.