Depreciation on a timeshare

[Spet0789]

Obscure one this! My wife has recently bought a 30 year timeshare. It gives one week’s use per year. Every year there is an obligation to pay a service charge.

My question is how is the loss of capital value treated for tax purposes?

Assume that the upfront cost was £30k. So over the course of 30 years its value depreciates to zero at £1k pa.

Scenario 1) We use the timeshare week ourselves. Can any use be made of the notional £1k depreciation? Can it be offset against income or capital gains?

Scenario 2) We rent the week out for £2k net of the service charge. Is this £2k simple taxable income for my wife? Again, as before, can the notional £1k depreciation be offset against this income, or any other income or capital gain?

Many thanks to any tax-wise fools who can provide their views, all subject to the usual caveats of course!

[PinkDalek]

I would imagine the timeshare itself would be treated as a short lease but others more familiar with such an asset (liability?) may know better. CGT would only come into play when you manage to sell or otherwise dispose of the thing. Then the original expenditure would be treated as being wasted but not in a straight line. It is complicated and is broadly outlined here:

https://www.gov.uk/hmrc-internal-manual ... al/cg71141

Other than that:

1) No.

2) Other than the service change, yes, the £2,000 wouldn’t appear to qualify for any further deduction.

Also see https://www.gov.uk/guidance/tax-free-al ... e#property which may be of benefit re the £1,000 Property Allowance, if that is better than in effect claiming the service charge and would be subject to any other property income your wife may have.

If your annual gross trading or property income, from one or more trades or businesses is more than £1,000 you can use the tax-free allowances, instead of deducting any expenses or other allowances.