Advanced Tax Property Income Tutorial Solutions A10
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jaya19844Advanced Tax Property Income Tutorial Solutions A10
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jaya19844ACFI 2308
Property Income Lecture Example Answer: Sue
Net Property Income: Pooled on accruals
Rental Income
Property 1
16,000
Property 2 Rental income 9/12 x 20,000
15,000
3/12 x 24,000
6,000
Grants 20 year lease
21,000
Premium on short lease
P 2% (n-1)P
25K (2% x 9 x 25K)
20,500
Total income
57,500
Less expenses : wholly and exclusively for business of letting
Property 1
Furnished 10% W & T
10% (16,000 800)
1,520
Council Tax
800
Repairs
1,600
Cleaning
500
Redecoration
920
Property 2
Tutorial Solutions Property Income A10
Repairs
3,800
Agents fees
2,500
Loan interest
8,950
Insurance on investment properties
(3,000 x 9/12)+(3,200 x 3/12)
Gardening services
3,050
4,000
27,640
Net property income
(59,250 27,640) less b/f loss 1,300
28,560
Property Income Tutorial Solutions
Tutorial A Answer: Ros
a)
Factory
Rent (accruals basis) 11/12 x 24,000
Short lease premium (Note 1)
=
=
22,000
18,600
4,831
Furnished lettings in Cornwall
Jointly owned asset (Note 2)
50% property income (9,662 x )
Total property income on Ros
45,431
b)
Harry y/e/ 31.12.10
2
Tutorial Solutions Property Income A10
Trading expense claimed by Harry
Rental expense accrued
(1.5.10 31.12.10) 8/12 x 24,000 =
Short lease premium deduction
(Note 1) 930 per year x 8/12 =
16,000
620
Total expense y/e 31.12.10
16,620
Tutorial Solutions Property Income A10
Note 1
Lease premium 30K for 20 years
Property Income
Premium
Less 2% (n-1)P
2% x 19 x 30K
30,000
(11,400)
Assessable on Ros
18,600
Ros is assessed on the rental income of 18,600 on 1 May 2010.
Harry can claim relief for rental income paid but must spread relief over the 20 year lease.
Harry claims relief of 18,600
20 years
930 per annum
Note 2: Cornish Property
Rental for 48 weeks
Less expenses for renting
Water rates
Heat and Light
Interest
Less wear and tear allowance
10% (20,000 2,000)
20,000
2,000
1,400
5,805
1,800
Annual expenses
(Disallow 4 weeks personal use)
11,005
x 48 =
52
(10,158)
Less trips to inspect property
(60 x 3)
(180)
9,662
Note: this does not qualify as FHL as periods of occupation are too long.
Tutorial Solutions Property Income A10
Tutorial B Answer: Chloe
2010/11
Building Society Interest
8,000 x 100/80
Dividend
4,500 x 100/90
Property income
(Working 1)
Personal Allowance
(6,475)
Tax Charge
28,275 x 20% =
5,000 x 10% =
Tax liability
Less tax suffered:
Dividend
Interest
Payment on account
(500)
(2,000)
(3,000)
Tax due 31.1.12
Tutorial Solutions Property Income A10
Working 1:
Home
Gross rental income
6,000
Relief for rent a room
(4,250)
Nett rental assessable
1,750
Shop
Rent (accruals) (6250 x 4)
Less:
Bad debt
Agents fees
Insurance
Interest
No relief for extension (Capital)
25,000
6,250
1,250
750
3,250
(11,500)
Joint assets of husband and wife: income split 50:50
13,500
Income assessed on Chloe
6,750
Furnished holiday lettings
Rental
CAs
27,000
(5,000)
22,000
Property Income Pool
(6,750 + 22,000 + 1,750)
Less loss b/f
30,500
(5,750)
24,750
