Income from Property
If you are a landlord or a person entitled to receive income from property, tax is chargeable on you for the rents receivable in the year of assessment.
Should you receive a premium in connection with the granting of a tenancy, or on the assignment, variation, surrender or waiver of a lease, part of that premium is likely to be subject to tax. A premium is usually a lump sum, other than rent, given to the landlord or person entitled to receive the rent. "Key money" could be a premium and may be taxable. As the computation of the taxable amount is fairly complicated, please contact your assessor if you require further details.
Certain deductions can be made from the rents receivable on property before they are charged to tax. Examples of allowable expenditure, which can be deducted from rents receivable in the year in which the expense is paid are given below:
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a. |
Payments for maintenance and repairs. |
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b. |
Insurance; property and contents. |
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c. |
Payments for management, e.g., cost of rent collecting; fees paid to an agent; legal expenses incurred in connection with the letting; etc. |
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d. |
Parish rates. |
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e. |
Rent (if you are sub-letting) and rentes. |
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f. |
The cost of replacing machinery or plant used for maintenance, repair or management of the property |
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g. |
Capital allowances, if a permanent choice is made for such allowances, on machinery or plant used for maintenance, repair or management of the property. |
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h. |
Interest paid on a loan to purchase or extend the property |
Examples of expenditure not allowable as a deduction against rents receivable are as follows:
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i. |
Additions, alterations and improvements to buildings. |
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ii. |
Compensation paid, for any reason, to outgoing tenants. |
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iii. |
Rent lost through the defalcation of an agent. |
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iv. |
Costs of professional advice etc. in connection with applications to the Department of Planning and Building Services. |
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v. |
Legal expenses which are incurred for a purpose other than that of maintaining the rental income. |
Further advice on any of the matters in this leaflet may be obtained from the Comptroller of Income tax.
Feb 2004
