Property sale loss versus rental income

[johnjw]

I have been in the letting business for about ten years and currently have three tenanted properties. Last year I bought a property which required some renovation work, which I completed before advertising to rent.
As it turned out, I was unable to obtain an economic rent so, after a couple of months, I offered the property for sale or rent and accepted an offer to purchase.
After taking agents fees, maintenance and renovation costs into account, I made a small overall loss.
I'd appreciate advice on whether, bearing in mind that this property, though advertised for rent, was never rented, there is any way that the loss can be set against profits from my letting business?

[Mr Landlord]

Surely a question for your accountant to answer

[johnjw]

Property sale loss versus rental income

Mr Landlord,
Most of the taxation questions on this forum are questions which could be answered by an Accountant. However many of us with relatively small letting businesses, do not have an Accountant. This forum is extremely useful in answering specific questions and usually the answers (which may be criticised and discussed) will be useful for a large number of people.
John

[Tax Accountant]

''Most of the taxation questions on this forum are questions which could be answered by an Accountant.''

I wonder how many accountants would be as much detailed, prompt and benevolent. I also wonder how many of the queries would even be raised if each reply attracted a fee.

As to the question, I would say that all the costs would be allowable, some as expenses of your lettings business and some against Capital Gains Tax as improvements and incidental costs of selling.

Difficult to be precise without full facts.

Ramnik

[johnjw]

Property sale versus rental income

Ramnik,
Thank you for your reply to my question.
My costs were:
Selling Agents and Surveyors £1500; Painting and decorating £800; Insurance £200; tiling kitchen and bathroom £800; replacement door and window £500; electrical checks and repairs £250; gas check £50; garden work £300
Total costs £4400.
The selling price was slightly higher than the buying price, but I lost £1800 overall. I imagine that I could record this as a capital loss but I'd prefer if possible to set some of the costs against rental income from my other property.
On the general point about questions for Accountants or this forum, I was responding to Mr Landlords comment. I think if you employ an Accountant you'd probably for the most part, just give them the facts and trust him/her, rather than raising costs by asking questions.
On the other hand, if you do your own accountancy for a small letting business you will meet specific problems from time to time. Also, you are all the time trying to increase your knowledge of taxation and other issues. This forum is invaluable for this purpose. I think the quality of information we have here, is very high and for this I would like to thank you Ramnik in particular and also other contributors for your time and expertise.
John

[Tax Accountant]

Ramnik,
Thank you for your reply to my question.

My costs were:
Selling Agents and Surveyors £1500; Painting and decorating £800; Insurance £200; tiling kitchen and bathroom £800; replacement door and window £500; electrical checks and repairs £250; gas check £50; garden work £300
Total costs £4400.

The selling price was slightly higher than the buying price, but I lost £1800 overall. I imagine that I could record this as a capital loss but I'd prefer if possible to set some of the costs against rental income from my other property.

£1,500 for selling agents and surveyors is definitely for CGT as these refer to buying and/or selling the property.

Rest may go towards lettings business but you should be prepared to justify your inclusion of these costs if challenged.


On the general point about questions for Accountants or this forum, I was responding to Mr Landlords comment. I think if you employ an Accountant you'd probably for the most part, just give them the facts and trust him/her, rather than raising costs by asking questions.

On the other hand, if you do your own accountancy for a small letting business you will meet specific problems from time to time. Also, you are all the time trying to increase your knowledge of taxation and other issues. This forum is invaluable for this purpose. I think the quality of information we have here, is very high and for this I would like to thank you Ramnik in particular and also other contributors for your time and expertise.

You should not be put off from airing your queries in this forum even if you engage the services of an accountant.

It is clear from your past postings that you do have a good grasp of the issues as you mainly post queries which may appear straight forward to some but actually involves technical consideration. The current query is a good example as the answer is not all that straight forward or clearcut. I also know of your past postings regarding eligible interest and VAT claims.

Thank you for your compliments.

John

Hi John,

See comments above in Red.

Ramnik