Nichola Ross Martin's Tax Consultancy

Top tips on property, abridged from our guide to Property income and expenses.

Property and losses:

There are different types of property business, but the general rule is that you cannot mix and match losses between them unless the business is treated as a trade.

• Losses on qualifying furnished holiday lets: treat as if losses from a trade; you can offset against other income.
• Losses on residential/commercial property business: carry forward against future profits. Where you have profits and losses on different properties during the year you can agregare them.
• Losses on overeas property business: carry forward against future profits of the same business.
• Losses which arise as a result of capital allowances other than the annual investment allowance or agricultural activities can be offset against other income.
• A loss arising from the Annual Investment Allowance will be restricted if created as part of a tax avoidance arrangement.

Property: capital allowances and repairs

• You cannot claim capital allowances on furniture and fixtures used in a dwelling house which is used for letting, unless it is a qualifying furnished holiday let, or a hotel type business (which is treated as trade).
• You may claim capital allowances on the shared areas of buildings that contain multiple dwellings, but these are limited to lobbies, lifts, etc, see Can I back-claim capital allowances on residential property? 
• As an alternative you may claim a wear and tear allowance (10% of rent, water rates or business rates).
• The alternative is to reclaim the renewals basis for the cost of furniture, furnishings and chattels. This means that there is no tax relief for the original cost of the asset only its replacements.
• These rules apply only to furnished dwellings. In the case of unfurnished dwellings, the landlord can still claim the cost of repairs and renewals to fixtures – such as fitted kitchens, central heating systems etc.
• Under the terms of the Energy-savings items regulations a landlord can claim up to £1,500 per dwelling house on the cost of new insultation products.