Allowable Expenses

21/05/2019 12:06:05
My wife and I are resident in France and jointly own one single property in the UK which we rent out.
During the 2018/19 tax year, one tenancy ended and the property was empty for 4 months before another tenant moved in. The property is rented unfurnished and was not used by us between tenancies.
First question : Do I have to indicate a private use adjustment (in box 30) for these 4 months ?

During a tenancy the tenant is responsible for paying council tax and electricity. Between tenancies we have paid it.
Second question : Can the council tax and electricity paid by us be claimed as expenses ?

The property is part of a block of retirement apartments. There is a management agent responsible for maintenance of the entire block and communal gardens and all leaseholders pay them management fees. All leaseholders also pay ground rent to another company.
Third question : Are these costs allowable expenses or maybe only some of them ?

Fourth question: In cases where a tenant's deposit is paid to the landlord to compensate for damage, should this be included as income ?

Thanks in advance.

Re:Allowable Expenses

22/05/2019 08:42:35

Thank you for your questions.

Private use would only need to be included if you had used the property yourself. If it was empty between tenants and was expected to be rented again then private use would not be required to be included on your tax return.

In respects of household bills incurred whilst the property is empty such as council tax and electricity. Any rent, rent charge, ground rent or similar annual payment that the landlord has to pay in respect of the property, is an allowable deduction. Council tax is included in this type of payment. The Fees incurred for maintaining the garden can also be deducted under the cost of providing services section of the guidance below.

There is also further advice regarding rates contained in this guidance:

Property Income Manual 2068

Any expenses that are incurred and paid for by multiple owners must be apportioned to the percentage paid for by the owner making the claim on their self assessment return.

Deposits only become income if they are withheld to make repairs to the property. They should match the repairs being made which may be claimed as expenses.

The following link gives some further detail on this:

Property Income Manual 1052

Allowable Expenses

22/05/2019 09:59:11
As the property was let after a void period all expenses incurred by you in the void period are claimable. Ground rent, management fees and utilities are allowable.

If I read this correctly some of the deposit has been paid to you as a result of damage. This would be taxable as you would be paying for the repairs and claiming for them.