I have just received my first property rental client who has two properties which are let to students (not furnished holiday lettings). I need clarification on the following:
1. Personal Allowance cannot be used as this is unearned investment income.(no other income). Wife has earned income.
2. Client is paying a Retirement Annuity Premium, assuming gross payment before tax. Client has no earned income.
Am I correct in assuming he cannot use this to reduce his taxable profit, but that relief will still be given at the basic rate on the self assessment return. Therefore if he incurs a loss (this is carried forward), but he can claim a refund from the RAP.
3. From what I have read, Inland Revenue treat the profit/loss as shared equally betwwen husband and wife even if properties are only in husbands name, unless they are told otherwise.
4. Finally, when the properties are sold, for capital gains purposes can both the husband and wife use their combined exemptions currently £8200 each, or is only one allowed. As stated above Inland Revenue assume joint ownership. Previous accountant only allowed one exemption.
Thanks to all for any helpful advise.