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Rental property

costs incurred pre sale

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rental property - ceased to be rented in March 2018 and sold in June 2018

normal costs incurred for mortgage interest up to sale - client has other properties and wants to claim the cost against those.....not sure if thats allowable as there is clearly no intention to rent the property again

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10th Jul 2019 11:34

There are differing views on this but, as a property business is treated as continuing until the last rental property owned is disposed of/used for a different purpose, there is a strong argument for allowing all revenue costs up to the date of sale - this is assuming that there was no private use by the owner before the date of sale.

If there was only one single rental business then, yes, the business would have ceased once the tenant left and the owner made the decision not to re-let.

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10th Jul 2019 11:36

Been discussed before. Can't remember the detail but think it was allowable. I think the late PNL gave a useful analysis.

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10th Jul 2019 15:28

https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim2510

"The provisions for dealing with post-cessation receipts and expenses for trades also apply to rental businesses."

So that probably gives the answer you want even if this had been the client's only property.

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to Accountant A
10th Jul 2019 16:22

Nope. That won't help at all. You need to read BIM on the post cessation expense rules. Only applies to certain types of expense, which don't include interest or repairs.

Personally, I read the property business rules to operate like farming. The person is the property business; the property business commences when the person commences and ceases when the person ceases. HMRC then make up their own rules about it, but that doesn't mean they're right.

Further, the way that a property business is defined, any transaction that relates to the letting of property means that there is a property business at the time of the transaction, and that transaction is a transaction of the property business.

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to Vile Nortin Naipaan
11th Jul 2019 01:26

Vile Nortin Naipaan wrote:

Nope. That won't help at all.

Typical, the one time I try to help and it's a fail!

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