Property Income And Investment

Question 1

What basis is land and buildings treated if under 150k?

Answer 1

Treated as cash basis if gross annual rental income <= 150k if not then accruals basis will be used

Question 2

Treatment of financing costs (residential properties)

Answer 2

1. From 20/21 onwards no finance costs relating to rental properties will be deductible from property income
2. Instead the finance costs will be relieved at the basic rate (20%) from the tax payers income tax liability
3. Note this does not apply to finance costs relating to furnished holiday lets, non residential properties or to companies renting out residential properties

Question 3

What is replacement furniture relief?

Answer 3

1. The property has to be at least part furnished to get this relief
2. No relief on cost of original furniture
3. Can deduct replacement costs - but restrict to a like for like replacement cost where an item is improved eg replace washing machine with a washer dryer
4. Eligible costs include furniture, floor coverings and carpets, electrical appliances, kitchen stuff -and relief is reduced by any sale proceeds for items sold
5. Not available for furnished holiday lets - they are eligible for CA instead