Options to set off property rental losses

There are different categories of property rental business such as UK property businesses, overseas property businesses, UK furnished holiday businesses and EEA furnished holiday lettings businesses.

As a general rule, landlords renting out more than one property will automatically receive any relief for losses as they are set against profits made on other properties in the same property rental business. This is known as the overall profit method. Where an overall profit is made there is no need to claim relief for the loss on an individual property as the properties are combined on a single property rental business.

Where an overall loss is made, the loss can be carried forward and offset against future profits.

In general, there are limited options for obtaining property loss relief and there is little scope for setting off losses other than against future profits of the same business. It may be worthwhile to look at what options are available to increase profits with other properties in order to be able to utilise losses.

Planning note

It is not possible to offset losses from one rental property business against profits from a different business. For example, losses from a UK furnished holiday lettings business are only available to set against profits from a UK furnished holiday lettings business.

Posted in Income Tax

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