Property Income

Question 1

What is the threshold for the joining the cash basis in property income?

Answer 1

£150,000

Anything above must use the accrual basis for property income

Individuals below the threshold can elect to use the accrual basis

Question 2

What basis is is the default for calculating the income for land and buildings?

Answer 2

Cash Basis

Question 3

Property Income allowable dedication: Insurance?

Answer 3

Yes - e.g. building insurance

Question 4

Property Income allowable dedication: Finance Cost?

Answer 4

Yes - As a tax reducer…

The relief is calculated on 20% of the lowest of:

1) Finance costs for the year plus any finance costs b/f
2) Property business profits (after using any b/f loses)
3) Adjusted total income: NSI after deducting the personal allowance

Question 5

Property Income allowable dedication: Legal and Professional costs?

Answer 5

Yes

Question 6

Property Income allowable dedication: Rates and Taxes paid by landlord?

Answer 6

Yes

Question 7

Property Income allowable dedication: Services - e.g. cleaning?

Answer 7

Yes

Question 8

Property Income allowable dedication: repairs and maintenance?

Answer 8

Yes

Question 9

Property Income allowable dedication: Capital allowances?

Answer 9

Only available on plant and machinery used for repairs and maintenance

Question 10

Property Income allowable dedication: Replacement Furniture relief?

Answer 10

• No relief for initial expense, but the cost of replacing is allowable
• The amount of the relief is reduced by any proceeds from the sale of the item being replaced but increased by any cost
• Relief only available on like-for-like replacements (No deduction available for improvements)
• Expenditure on a replacement asset that is improved purely due to advanced in tech is allowable in full

Question 11

Property Income allowable dedication: Fixtures?

Answer 11

The cost of replacing fixtures which are integral to the property is deductible

Question 12

Property Income allowable dedication: Advertising for new tenant?

Answer 12

Yes

Question 13

What is the property allowance?

Answer 13

A property allowance of £1000 per tax year is available for individuals (Not companies)

• If rental income is below £1000, this will automatically apply

Question 14

What happens if there are losses in Property Income?

Answer 14

1) Income from property in the IT comp = 0

2) The loss is then carried forward against first available future income from property

Question 15

What is the ‘rent-a-room’ relief?

Answer 15

£7,500 p.a

Cannot claim the property allowance on income qualifying for rent a room relief