All in Residential Property

Rental Losses - Ring fenced

Rental Losses - Ring fenced

Jasmine KM
Rental, Residential Property, Ring Fencing

From the 2019-20 income year new ring-fencing rules apply to residential property deductions. Ring-fencing means residential property deductions can only be used to offset income from residential property. You cannot use rental losses to offset other income like salary and wages.

Under the rules, you can only claim deductions up to the amount of income you earn from the property for the year.

You must carry forward deductions over that amount. You can use these deductions to offset your rental income in future income years.

Family dealing with health crisis falls victim to bright-line test

Jasmine KM
Bright Line Test, Finance News, Residential Property, Taxes

Charlotte and Andrew Spenceley do not want to sell the land they bought for a new family home, but a health crisis means they have to, and they will have to pay tax on the capital gains they make because of it.

In these situations, if the homeowner isn’t looking to profit the outcome could seem to be quite harsh.

The bright-line test, which was introduced by the National Government in 2015 but extended by the Labour Government to require properties to be held first for five years and then 10 years, was intended to tax capital gains on investment properties.