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for individual as cash basis is allowed until the property receipts exceed 150000.
so if a individual has both a investment property on rent and also let a tenant rent a room in his residence……..the receipts from both should be included to arrive if it exceeds 150000 or not. If it does then accrual basis to be applied.this mean receipts from all types of property should be taken into account.am i right?
and another question all the allowable deduction from property income it should be done on cash basis or accrual basis or again it depends on if the income receipts exceed 150000 or not….incase nothing mentioned in question im talking about
as in ur lecture u said allowable deduction is on paid basis………….so incase the question tells rental income should be taken on accrual basis…..so in relation to that will we have to use allowable deduction on accrual or we can continue on cash basis
The examiner has stated
“In any examination question involving property income for individuals and partnerships, it should be assumed that the cash basis is to be used unless specifically stated to the contrary”.
You will therefore always use the cash basis unless instructed to use the accruals basis.
The cash basis applies to both income received and expenses paid. If as above the question states that you are to use the accruals basis (very unlikely!) then again both income and expenses will be included on the accruals basis.
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