Property Income

Income from UK and overseas properties are tax on an accruals basis not a receipts basis.  Tax relief is available on the Interest element of the monthly mortgage payments, as well as factoring fees/letting agent’s commission/council tax/building and contents insurance and repairs, although some types of repairs will be treated as enhancement expenditure and won’t qualify as a repairs, instead relief will be given when the property is sold.

Tax relief is generally not available on the following:-

  • Furniture, fittings, white goods, crockery and linen where the wear and tear allowance is claimed.  Replacement cost may be used in stead of the wear and tear allowance.  Where the replacement method is used not relief is claimed for the initial cost of the item.
  • Any large repair costing more than 50% of the value of the item is capital expenditure, not revenue, such as a large repair to the roof of the letting property.
  • Reburbishment or upgrading of  the property is capital expenditure.  Relief is given when the property is sold.