Renting out House - TAX Return help?

angiesdesire

I have been renting out my house for just over 13 months now, and I need to fill out my tax return for 2005-2006. I have been to various web sites to see what I can use to offset against any tax due - i.e. interest on mortgage payments, agency fees etc. I have also read that I can use any reasonable expense incurred in the previous 7 years on my first tax return, as long as this was to set up the house ready for renting i.e. extra keys being cut, painting etc.
Does anyone out there know of any websites that will help me fill out these forms step by step, or do I really need to get a financial advisor to sort out this first return?
I get under £10,000 per annum (gross) from the rent, and pay 10% of this to my agent.
I want to try and get this right, as I don't fancy being investigated by the tax man in years to come!

DINOKIDS

Hi, I am in the process of purchasing a house to rent out and have been worried about these tax forms. I have been advised by several friends that the best thing to do is get an accountant. I now have one ready for when my tex return is due next year. I know what you're thinking ..... more money, but atleast his fee will be another bit the taxman can't have !! Good luck !!

samspam

You really don't need an accountant if you only have 1 rental property, it's really not that complicated.

Take the gross amount of rent

Then deduct:

Lettings agents fees
Service Charge
Ground Rent
Mortgage interest (dead easy if it's an interest only mortgage!)
You are allowed a % for wear and tear if you rent the property furnished.
Insurance
Repair Bills
Stationary, stamps, phone calls etc are all deductable as expenses.

This net amount is then added to any other income and you can calculate the tax using the formula's provided on the form, in fact it's easier to do it online.

Just make sure you have receipts to back everything up.
I would call the IR to find out exactly what expenses you are allowed to claim.

So long as your return looks reasonable it is unlikely you will be investigated. There are bigger fish to fry.

You need to keep all your books for a period of 5 years I believe and then you can bin them.

rosysparkle

The wear and tear allowance is 10% of the gross rents less council tax/utilities/water charges (items that the tenant would normally pay) per year.

Any expense that is wholly and exclusively concerned with the letting and is of a non-capital nature can be set against the rental income. For example agents fees and the associated VAT, the cost of the annual gas check, electric checks, repairs (not improvements), interest on mortgage/loans, buildings, contents and rent protection insurance, etc.

If the income is less than £15,000 you only need to provide a total for the expenses. If over £15,000 you need to provide a full breakdown.