Rental income and Tax return

DRINK?

Hi all....new to this and have spent hours googling though figure there is more common sense and knowledge tied up on users here than on the rest of the interweb;)

Anyway, hoping someone can advise as to my situation.

I have a flat, rented out since May last year, rental income is 820 ( less agents fee and VAT )

On this property I have a £50k interest only mortgage that did cost me £186 a month though has come down massively in the past couple of months.

Also prior to the property being rented ( it was inherited btw ) I spent about 20k doing it up, new kitchen, new bathroom, total redecoration, new carpets etc and white goods...

my questions are do I need to request a self assesment form, I have a feeling I can wait until October as I have only been recieving income for part of this tax year?

Am I right? what would class as a allowable expense to ofset, if my costs to initially get the property into a rentable state are more than the rental income and I make a loss, can I carry it forward?

Please advise a bit of a thicky:p

DRINK?

anyone....come on;)

poppysarah

Why don't you ring them and ask them when you need to tell them you're earning money?
It's within three months of starting - else you can get a fine.

The accounts bits - you prob need to get some specialist advice from an accountant to be sure of getting it right. Or go try landlordzone or one of the other landlord forums where they'll have some more tax advice - but as always seek your own professional advice as it's your neck on the line if you get it wrong.

I think repairs before tenant move in are capital expenditure not tax deductables.

tbs624

poppysarah wrote: »

..It's within three months of starting - else you can get a fine.

That's for registering as self-employed - different to declaring property rental income.

DRINK? welcome to the board as a newbie You're right that you need to declare by the Oct after the end of the tax year in which you first let the property, so ring your local tax office and get a return & explanatory Land & Property notes sent out to you.

You can set things like the interest element of your mortgage,maintenance & repairs, membership fees of LL associations, building insurance premiums, gas safety certs, stationery, travel incurred "wholly & exclusively", water rates if you pay them etc against the income. If you are letting furnished then there is the 10% allowance to be considered.

All the info that you need on allowable expenses can be found here, and there's some basic info here. You may also be interested in this . If you haven't joined a national LL assocation yet, these sorts of issues are ones they can give you good clear advice on.

poppysarah

tbs624 wrote: »

That's for registering as self-employed - different to declaring property rental income./quote]

And that's why I think this country is mad. Being a landlord is a job - it's the same as anything else - so why is it treated differently?

Trollfever

These pages aim to help you understand some of the many things you need to think about when you're running a business, especially the main tax and National Insurance (NI) issues.

http://www.hmrc.gov.uk/startingup/index.htm

clutton_2

the property business is dealt with in several diferetn ways by the REvenue - you really need the advice of a property accountant BEFORE you fill in the return - i would get him to fill it in as s/he will know all of the allowances claimable and will save you tax in the long run

you need to set up the business the right way from day one, and this will depend on your other financial income.

yes, losses can be carried forward

Premier_2

DRINK? wrote: »

...my questions are do I need to request a self assesment form, I have a feeling I can wait until October as I have only been recieving income for part of this tax year?

Am I right? what would class as a allowable expense to ofset, if my costs to initially get the property into a rentable state are more than the rental income and I make a loss, can I carry it forward?

Please advise a bit of a thicky:p

Your feeling is correct, the initial tax return will be for the year ended April 2009.

You can claim tax relief on a whole host of expenses wholly & necessarily incurred in running the rental property e.g. interest, letting fees, etc.
HMRC will provide you with more details. You don't need an accountant to complete your tax return, but if you decide to use one, he'll probably save you money if you don't know what you are doing (don't forget his fees are eligible for tax relief too!)

W.r.t. the initial costs that you incurred in getting the property up to rental standard, they are probably considered capital expenditure rather than expenses and as such are not eligible for tax relief against rental income. However they could be used to offset CGT later should you come to sell the property.

The link provided by Trollfever above is largely irrelevant to you as a person letting a property. The link relates to self employment which is different to you letting a property.

DRINK?

thanks guys much appreciated....apols for the delay have been away though, good stuff muchos gracious:money: