02 Jul What is classed as a property partnership?
A person may own a property that let out as part of a partnership business. It can happen if the individual is a trading partner or a professional partner who also lets out some of his land and buildings.
A less common scenario is, the individual is in a relationship that runs an investment company that is not a trade. But that involves or consists of the property is out.
When is there a property partnership?
Separate rental business
A rental partnership business regarded as a separate affair from any other rental company carried out by the partner. If a person owns property in their sole name and is also a partner in a partnership that lets out a property. In a scenario like this, the partnership rental income is not taken into account in computing the profits of the individual’s rental business – it’s deal.
If an individual is a partner in more than one partnership that lets out a land, everyone views it separate rental company. The income of one can not balance against the losses of another.
Kate has a flat that she lets out. She is also a partner in a graphic design agency, which works from a converted barn. The partnership lets out a separate barn to another business.
Kate has two property rental businesses. One business comprises the flat that she owns in her sole name and lets out. The partnership rental business consisting of the barn that let out as a separate rental business. This is a long-term arrangement.
Kate must keep her share of the profits or losses from the partnership property business separate from the personal rental business. She cannot set the profits from one against losses from the other. They must return separately on her tax return.