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Don’t forget to Save Tax by Mixing Business and Pleasure
Don’t forget to Save Tax by Mixing Business and Pleasure
By Marie walshe In Property Posted May 15, 2018 0 Comments

My client has a property business which includes a mix of residential and commercial properties.

The Pleasure (Property P) is a residential property, it has a small rental loss brought forward, and has made a profit (bigger than the loss b/f) this year.

The Business (Property B) is a commercial let, it also has a rental loss brought forward, but it has unfortunately made a loss this year

The client wants to know if I should offset some of the loss from Property B against the profits of property P first, or should the two never be mixed? i.e. I should offset property A’s b/f loss against its current year profits only?

The business rental losses just carry forward against profits from the now smaller business.

The key point to remember is that letting business that are owned differently e.g. a solely owned property and a jointly owned property, are separate businesses (a sole trader and a partnership) and so the losses for one cannot be offset against the other.

However, if owned by the same party, both are part of the same letting business.

Accordingly, if you do not have a net loss this year (the profit on A this year is > than the loss on B this year) then the losses are just offset as required against this profit. If an overall loss this year then that just gets carried forward with the b/fwd loss. Don’t let it confuse you.

You are responsible for your own taxes, so don’t blame the taxman, However, if you need some help, make an appointment to see us by emailing mariewalshe@certax.co.uk

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