R Residential Rental and Loss Ring-Fencing

New tax rules affecting landlords of residential property were introduced with effect from 1 April 2019. This workpaper calculates losses and ring-fenced losses for both property by property and portfolio basis and assists in determining when rental losses can be offset against the taxable sale of a property and/ or the taxable income of the owner

Calculate ring-fenced losses

If you have previously used CCH Workpapers, use the Rollover Data function to carry forward prior year data from previous workpapers. The rollover data functionality is only available for this worksheet from 2021 workpapers onwards.

  1. On the Workbench sheet:
    1. Ensure the balance date and entity type have been entered / selected
    2. Select the number of R1 Rental income and expenses sheets you require. R Residential rental and loss ring-fencing sheetwill be added automatically.
  2. For each rental property, enter income and expense information onto the R1 sheets.
  3. On the R Residential rental and loss ring-fencing sheet:
    1. If this is the first year, select which method of calculation you will use for this entity - either Portfolio or By property
    2. For each property (where values have not been rolled forward from last year), enter:
      1. Purchase date
      2. Current value - required to determine whether entity is "Land-rich":
        1. For residential land - later of the land's most recent capital value set by the local authority, or the cost of the land, or market value where acquired from an associate
        2. For property with an adjusted tax value, its adjusted tax value
        3. For other property (except leasehold property) - its market value
        4. For leasehold property - registered valuation no more than 3 years before the end of the income year

      3. Sale date (if applicable)

      4. Elected to be taxable?: select whether the property is elected be taxable - i.e. where an election has been filed with the IRD notifying property is held on revenue account

      5. Rental income / (loss) will pull through from relevant R1 Rental income and expenses sheet

      6. Prior year losses: this value should roll forward from last year's workbook (if exists)
      1. Cost of sale: If property has been sold during the year, click the link to expand the cost of sale schedule and enter relevant costs
  4. Taxable income of owner: losses available to be offset against the taxable income of the owner will be calculated.
    1. Losses utilised: enter value of losses offset against taxable income of the owner
  5. To carry forward: ring-fenced losses to be carried forward to next year are calculated

Land-rich determination

To determine whether entity is "land-rich" enter the following information:

  1. Total value of residential properties not already listed above: such as main home.

  2. Total value of entity's assets

If the entity is determined to be "land-rich", click the View Land Rich Entities Sheet link. Use this sheet to assist in calculating deductible interest for the interposed entities.