Partnership Property

Partnership Property

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Trading LLP owns its commercial premises. Not all members have a capital share of this property. So 'rent' is charged to the LLP trade, and split between those members, with the profit then being split between all the members. In this instance, I understand the 'rent' element is still treated as trade profit and therefore chargeable to both tax and Class 4 NIC.   However, what would be the situation if the property was held in a separate LLP, and that LLP the charges rent to the Trading LLP. Would the income from the Property LLP then be classed as rental income and only chargeable to tax?

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By gboy1980
04th Mar 2014 14:25

Second Try :-)

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Stepurhan
By stepurhan
04th Mar 2014 14:51

Profiting from itself

Can you clarify how the "rent" is being charged in the LLP accounts as it stands. It sounds more like a pre-share of the profits to the introducing partners. You can't have a rental expense in the accounts for the a property that is shown as an asset in the same accounts.

Can you also clarify why the property was introduced in this way in the first place? If the individual partners were to desire rental income from the property, would it not have made more sense for them to retain it personally anyway? If the LLP folds for some reason, the property is now tied into the LLP structure whereas keeping it outside would have put it outside the limited liability.

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