Should I use up section 23 with lower rate tax

[elainem]

Hi! accountant says that I should use my Section 23 only at the higher rate. My rental income is reasonable, but I have a lot of maintenance expenses. Last year I only worked in employment part-time. So, I was going to use up Section 23 at lower and higher rate of tax, amounting to E15,000 that I would use up this year in Section 23. Further, I am tyring to get out of being a landlord, so next year I will rent only one property, I have also about E35,000 maintenance and repairs from this year, so I will not use up any Section 23 going forward. I have E166,000 of Section 23, and this is my first year to use any of it. Should I use it at lower rate and higher rate of tax, which would mean I would use up E15,000. My accountant says it should always be at higher rate, but I was trying to explain to him that going forward I would only use very small amounts of Section 23, and might not now use the whole E166,000 within ten years. Sorry for being so long-winded. Any advice greatly appreciated.

 

[ubiquitous]

Your options are clear.

If you want higher tax relief, delay claiming until you have high-rate tax liabilities. If you want earlier tax relief, claim now.

You are the only person who can make this decision.

 

[MOB]

I am open to correction but:

1. I don't think you get a choice about when to use the relief - it is not open to you to declare a taxable rental income and keep the relief for later. If after deducting maintenance, loan interest etc. you still have a taxable rental income, it must be offset by the available relief. I am only a little over 50% sure of this - it is a long time since I studied income tax - But do get clarification on this issue.

2. There is no requirement that you use the relief within the ten years. You must retain the property for ten years or you lose the relief, but the using up of the relief will take whatever length of time it takes.

 

[ubiquitous]

1. I don't think you get a choice about when to use the relief - it is not open to you to declare a taxable rental income and keep the relief for later. If after deducting maintenance, loan interest etc. you still have a taxable rental income, it must be offset by the available relief. I am only a little over 50% sure of this - it is a long time since I studied income tax - But do get clarification on this issue.

Not correct afaik

2. There is no requirement that you use the relief within the ten years. You must retain the property for ten years or you lose the relief, but the using up of the relief will take whatever length of time it takes.

Correct afaik

 

[jacktb]

i have recently come up with this issue in relation to S50, student accommodation, the answer i got is that you must use up all available capital allowances/rental losses against CASE V income, you cant pick and choose what you use your allowances against....