Tax on Renting a property.

sugar_daddy1237

Hi

One of my friends is renting a property and has not been paying any tax on the income. He asked me if i could find out how he could or does he need to pay any tax.

Expenses are as below per month:
Rent £400

Mortgage: £315
House Insurance: £18.00
Boiler Insurance: £17.00
Mortgage protection: £21.00

Can anybody please help him out with relevant advice about how to go about paying any tax if any is due on the property. Thanks

<sebb>

Is the mortgage payment interest only or repayment?

bobby-boy_2

Get the tax booklet from HMIRC. It details what can be deducted against tax
loan interest
gas safety cert
eletrical safety cert
EPC etc

Join a landlords association!

housebuyer_abc

ak_wf1 wrote: »

Hi

One of my friends is renting a property and has not been paying any tax on the income. He asked me if i could find out how he could or does he need to pay any tax.

Expenses are as below per month:
Rent £400

Mortgage: £315
House Insurance: £18.00
Boiler Insurance: £17.00
Mortgage protection: £21.00

Can anybody please help him out with relevant advice about how to go about paying any tax if any is due on the property. Thanks

Only the interest part of the mortgage is an expense (if its a repayment mortgage the bit that isn't interest is not allowable for tax offsets)

Mortgage protection isn't allowed either as far as I remember.

As for what to do about it that depends. Is it a recent thing? If so just phone HMRC and let them know. If it's been longer i.e. since last april or longer then a whole tax year will have passed and they won't be happy - if this is the case I'd go to CAB first (although as renting is a business they might not be able to help)

Has your friend also got

a) Consent to Let
b) Landlord Insurance as opposed to just buildings insurance
c) Gas safety certificates etc
d) protected the deposit

The four above are all more serious in terms of penalties than the tax (oh and also in that they have a significant risk to the tenant - going so far as death in the case of gas safety)

tbs624

Straight from the horse's mouth - goole HMRC plus PIM (Property Income Manual) and SA105 ( self-assessment) . See also here

Even if your friend isn't actually making a taxable profit she still has to declare to HMRC. He should join one of the national LL associations, as Bobby boy suggests, or a local affiliate and if he still can't sort it out then pay for an accountant.