Tax on timeshare rental

silvercar

How many weeks is your time share for? Is the 1025 management fee for the whole year, however many weeks that is?

If you have the timeshare for 2 weeks a year and the management fee is 1025 for the whole 2 weeks. If you stay there for 1 week and have the other week available to rent out, only half the management fee would be an expense.

AlienInTown

Bookworm105 said:

AlienInTown said:

I'm grateful for your response. Because thus far my income comprised my salary (now my pension) and odd bits of interest, I have little exposure to things like allowable expenses.

So, my first question is whether I can set off the timeshare management as an expense against the rental income we received. 

The second question is what amount I'd have to pay tax on, using the following figures:

Management fee  £1025

Rental received    £1015

However, the rent charged is £1450; the company than subtracts utility charges, their commission and VAT on the commission.

So, by my reckoning I make a net 'loss' of £10 (1025 minus 1015).

I don't know what I should show as the gross income - the cash I receive or the amount the renter pays. In either case, since it exceeds £1000, I'd need to show it on my tax return. But what expenses can I write off against this?

<SNIP>

however the rest of your figures are confusing:

who pays the 1450 "rent" and is that monthly, weekly or what?
- is that what the management company charges to you ?
- does the 1450 include 1025 management fee so the remaining 415 is the utility charges, their commission and VAT?

potentially your costs incurred during the letting period would be 1450 / number of days that covers x number of days that your customer rented it for.

if however the 1450 is what the customer pays to the management company and the management company (not the customer) then paid you the net amount of 1015, that means your costs for the rental period is the management fee on a time apportioned basis. The utilities, commission and Vat are ignored as the customer has paid them, in full, to the management company directly, so are not your costs during the rental period. 

Simply doing 1015 - 1025 looks very wrong as that implies the management fee tallies to the minute with the time period the customer rented it for ?

Alternatively you could just bite the bullet and simply declare gross income 1015 (tallies with money in your own bank) and subtract the 1,000 "no questions asked" Property Trading Allowance leaving you with £15 profit on which you would pay at least £1.40 of tax @ 20%, (or more if you are a higher rate taxpayer). If claiming the allowance you do not have to work out actual costs as your deduction, although obviously if you believe your actual costs are more than 1,000, then you will need to work them out and deduct that figure instead.

Perhaps I should've been clearer.
I'm talking about timeshare. We own a week in a timeshare resort (the same week, each year). Rarely, if we can't visit, we ask the timeshare company to rent it out on our behalf. Sometimes they're able to let out the week for the full recommended price and for the entire week. Other times they can't get the rental price and lower it to make sure it is occupied; or they may be able to rent out only part of the week.
Regardless of how much rental we receive or for what proportion of the week the property is rented out, wee still have to pay the full management fee; the £1025 that I mentioned. In my example, from the £1450 rent they charge, they take away their commission (+VAT) and utility charges and pass on the proceeds to me - in my example, £1015.
Since the management fee is a fixed amount every year, yes, we know exactly what we're paying out for our week (the question of tallying 'to the minute' doesn't arise).

Bookworm105

AlienInTown said:

Regardless of how much rental we receive or for what proportion of the week the property is rented out, wee still have to pay the full management fee; the £1025 that I mentioned. In my example, from the £1450 rent they charge, they take away their commission (+VAT) and utility charges and pass on the proceeds to me - in my example, £1015.
Since the management fee is a fixed amount every year, yes, we know exactly what we're paying out for our week (the question of tallying 'to the minute' doesn't arise).

The costs you deduct from any income you receive must be time apportioned on a daily charge basis. There is no other option even though not paid as a day rate, because technically it is so charged. 

the gross rental income you must declare is the amount charged to the customer by the TS company since it is your week that they are selling on your behalf. If that means they charge less than 1450 then you cannot claim all of the flat rate cost applicable to that week, you must apportion such costs between the rental "business" use and the "private" use for that week (even if you did not use it yourself in that time).

As others point out, confirm if all that 1450 (or less if applicable) is your income or some is solely the management company's (obviously you would use the Vat inclusive value on any figures where Vat applies)

as another poster has pointed out if "you" is plural then the income can be split between each person who is party to the timeshare agreement and each person then gets the 1,000 property trading allowance. The allowance reduces the taxable profit to zero, it cannot cerate a loss, So by far the easiest thing for each of you to do would be to each claim the allowance so each has zero net taxable rental income.

TheGreenFrog

Bookworm105 said:

you cannot claim all of the flat rate cost applicable to that week, you must apportion such costs between the rental "business" use and the "private" use for that week (even if you did not use it yourself in that time).

Not sure I agree that in these circumstances (where no actual private use in the year and the void part has in fact been advertised for letting) that there has been any private use.  Then again I am not sure if this is even a lettings business!   Either way OP has no tax to pay.

Bookworm105

TheGreenFrog said:

Bookworm105 said:

you cannot claim all of the flat rate cost applicable to that week, you must apportion such costs between the rental "business" use and the "private" use for that week (even if you did not use it yourself in that time).

Not sure I agree that in these circumstances (where no actual private use in the year and the void part has in fact been advertised for letting) that there has been any private use.  

I would accept that were it a Furnished Holiday Let, but it does appear to be so 

you can't just say that cost incurred is tax deductible because the property is being advertised rather than also remaining available for private use 

TheGreenFrog

Bookworm105 said:

TheGreenFrog said:

Bookworm105 said:

you cannot claim all of the flat rate cost applicable to that week, you must apportion such costs between the rental "business" use and the "private" use for that week (even if you did not use it yourself in that time).

Not sure I agree that in these circumstances (where no actual private use in the year and the void part has in fact been advertised for letting) that there has been any private use.  

I would accept that were it a Furnished Holiday Let, but it does appear to be so 

you can't just say that cost incurred is tax deductible because the property is being advertised rather than also remaining available for private use 

Yes I see your point.  I suppose it may depend on when they made it available for rent (eg in the prior tax year or the year of the letting).  If made available in prior year then arguably in no part of the tax year of letting was there an intention of private use.