I am a new joiner at this platform and a entry level accountant, I have been working for a small business, other than a main business my boss manages some properties through a private limited company with him being the only shareholder and yesterday he told me that he has stike a deal with one of his friends for a residential property. The deals go through something like this.
My boss's friend is facing some financial difficulty so he wants to let out his residential apartment which he use to live in, however the apartment is not in a reasonable condition to be letted out, my boss did a deal with him to rent the property on the property management company and agreeing to do the repair and maintenance from the company funds and then sublet it. The operating lease is done for 3 years intially with a clause of getting it extended, and during that time my boss's friend will be paid a fixed amount of rental i.e. if apartment is rented out for £1,500 / month then £750/month will be paid to him. The rest will be recorded with my boss's property company as the company is managing the apartment and conducting a repair of £25,000/- initially.
I am confused of how to record the following.
Repairs to property (Will it be classified under repair & maintenance and available for tax allowability) for the property company?
Repairs to property (OR will it be classified as direct cost, becuase of which the additional revenue is being generated apart from small management fee?)
Income - How to record the income from rental and payment to boss's friend?
My boss is planning to carry out the repair in this tax year, I roughly calculated and this repair will bring the company in losses for this year and profits will start from next year, should I put all of the expense in the current year and will the company be available to avail tax benifit (the complete repair expenses will be conducted this year)
I am sorry if I have missed out something, I would welcome every one's help. Please bear in mind not to use jargons and keep the answers simple. Please also refrain from critisicm and suggesting to employee an accountant with expertise in property management.
This is for my job and learning.