Property Expenses

Tax Question

My client is letting a residential property to their niece at below market value rent how are the expenses treated.

Tax Answer

Expenses incurred on a property occupied rent free by, for example, a relative are likely to be incurred for personal or philanthropic purposes – to provide that person with a home. The same applies where the property is let at less than a commercial rate or isn’t let on commercial terms. Unless the landlord charges a full market rent for a property (and imposes normal market lease conditions) it is unlikely that the expenses of the property are incurred wholly and exclusively for business purposes. So, strictly, they can’t be deducted in arriving at rental business profits. However, if a property is let below the market rate (as opposed to providing it rent-free), you can deduct the expenses of that property up to the rent received from it. This means that the uncommercially let property produces neither a profit nor a loss, but the excess expenses cannot be carried forward to be used in a later year.

Related Tax Questions

Substantial Shareholdings Exemption

How does the Substantial Shareholdings Exemption (SSE) work?

How does the Cycle to Work Scheme operate and what is the benefit of a Cycle to Work Salary Sacrifice scheme?

How does the Cycle to Work Scheme operate and what is the benefit of a Cycle to Work Salary Sacrifice scheme?

Borehole Capital Allowances

My client has a farming partnership, they have recently paid out over £10,000 on a borehole. The borehole will be used to pump water for the crops they grow on their farm and drinking water for th

Navigating Class 2 National Insurance Changes and Contribution Credits

I have been asked by a client about the changes to Class 2 National Insurance Contributions. He has been told that he does not need to pay any Class 2 National Insurance Contributions as he will be

Cash Accounting – payments that are received via an agent or factoring company.

My client does their bookkeeping on Xero, where invoices are raised and then sent to Hitachi Capital who administer all invoices. The VAT returns are filed on a Cash Basis. However, it takes

Navigating Inheritance Tax Planning: Understanding Gift with Reservation of Benefit (GWRB) Legislation

My mother, who is elderly, has several rental properties that she has owned for many years and we are worried about potential Inheritance Tax (“IHT”) charges on death. However, she will also ne

Vantage Fee Protect Customer Testimonials

Having changed over to Vantage a couple of years ago we have been very satisfied with the service. Especially the claims handling and technical advice lines for both our firm and insured clients on employment and business legal matters. The webshop Vantage offer allows our clients to join and pay electronically. This positively impacts our bottom line and makes things simple and efficient for our clients.

Linda Giles Chartered Accountant

Real people, real results

Vantage Fee Protect provide market leading Tax Fee Protection
Insurance schemes through accountants.

Don’t be shy,
get in touch

Vantage Fee Protect provide market leading Tax Fee Protection
Insurance schemes through accountants.

"*" indicates required fields

This field is for validation purposes and should be left unchanged.