Tax credits and income from property???

phoenix2010

Hope someone can give me an answer please

I am about to claim working tax credit ....left uni and starting work, Im a single parent and currently recieve child tax credit

When I start work and claim WTC in the "other income " box I know I have to declare income from property

I own a property , my tenants pay £550 per month minus expenses ie mortgage /buildings insurance/landlord cover I make a profit of about £200 per month

so do I declare 550 or 200

I rent the property I live in so pay a mortgage and rent

many thanks in advance

mitchaa

Profit of £200pm

nannytone_2

you pay a mortgage and rent?
no your tenant pays your mortgage plus £200 per month on top.
fo you receive hb/lha?

[Deleted User]

As you have income from property you need to complete a self assessment tax return.

The amount you declare to tax credits is the amount calculated as profit on your tax return.

There are certain expenses that you can deduct from the declarable amount so I would get advice from the self assessment helpline in regards to what can be deducted as an allowable expense.

andyandflo

subsoniccoyote wrote: »

As you have income from property you need to complete a self assessment tax return.

The amount you declare to tax credits is the amount calculated as profit on your tax return.

There are certain expenses that you can deduct from the declarable amount so I would get advice from the self assessment helpline in regards to what can be deducted as an allowable expense.

Excellent advice.

Remember you are running a business, make sure you ask about home office expenses, travelling expenses for a vehicle if you have one and capital allowances on assets either purchased by the business or your own (already owned) to help run the business. You may find that the 'net profit' in your simplistic calculation is not going to be the actual net profit - it could be significantly lower or indeed a loss.

The property itself is a business asset and not your own personal property - there is a subtle difference on how it is treated for most Income based benefits.

Good luck

andyandflo

nannytone wrote: »

you pay a mortgage and rent?
no your tenant pays your mortgage plus £200 per month on top.
fo you receive hb/lha?

Not entirely true.

The property business receives the gross rental income out of which the business pays the expenses - mortgage, fees, insurance etc.

The tenant does NOT pay the mortgage for him.

The OP does not have a home that he owns, he has a property that is part of his business empire.

If he lived in the property, he wouldn't have a business, nor would he have the profit that it generates.

As he has no home to live in, he rents elewhere, which is quite common in the buy to let industry.

Pont

Apols for hijacking - just a couple of quick questions!

Does the above apply if the property is in France?
What if your rent received from a tenant is less than the mortgage repayments (E460 rent received/E480 mortgage paid)?
For HMRC purposes do you carry out self-assessment and report a loss at the end of the tax year?
Can you offset losses in France against your tax liability in the UK?

This all seems a little crazy, but hear me out. If you have a rental property and for whatever reason it doesn't rent, does this mean you can offset, get tax relief on, your outgoings (mortgage, insurance, maintaining the property, Council Tax etc) against taxes paid in a different employment?
Thanks

andyandflo

Pont wrote: »

Apols for hijacking - just a couple of quick questions!

Does the above apply if the property is in France?
What if your rent received from a tenant is less than the mortgage repayments (E460 rent received/E480 mortgage paid)?
For HMRC purposes do you carry out self-assessment and report a loss at the end of the tax year?
Can you offset losses in France against your tax liability in the UK?

This all seems a little crazy, but hear me out. If you have a rental property and for whatever reason it doesn't rent, does this mean you can offset, get tax relief on, your outgoings (mortgage, insurance, maintaining the property, Council Tax etc) against taxes paid in a different employment?
Thanks

Phew, what a lot of questions. Right, and to keep things simple, I will not delve into the advantges/disadvantages of residency/non residency, maintaining a foreign bank account only accessible from that country, double taxation relief etc as that may cloud the water a little.

A simple straight forward answer is that not withstanding where the money comes from, you are a UK taxpayer in receipt of income from abroad.
So, if the expenses exceed the income you will have a net loss. The expenses are not just the mortgage, insurance, foreign taxes etc, they will include anything that is related in any part to running the business.
You will obviously have already registered the business with HMRC, and you will prepare your self assessed return each year.

The loss for each year can be set off against any other income that has suffered tax either in the current year, the years before or the years to come. This will give you a tax repayment.

Look at this way you have a property business that consistently 'loses' money. You set that loss against your other income so that you actually pay tax on the balance.

This type of property development is generally most useful in countries that have a high capital growth in property, but low income availability. You only pay tax on the minimum income, yet you will gain on the high capital appreciation. This was common up until a couple of years ago in the ex soviet countries. Low property prices, low yield but excellent capital growth.

phoenix2010

wow thanks for the advice

I do pay a mortgage and rent , but of course I get an income from tenants

I never wanted to be in this position , the property is a house which used to be my home , I had to relocate to go to Uni and couldnt sell it , so my only option was to rent it out and rent a property to live in

I have only just realised that I need to pay tax on the income , being a full time student on a bursary wasnt aware I had to pay tax , ok dumb maybe , I believe you can apply for excemption, will look into it

Thanks for the advice
Sally

Duncombe

phoenix2010 wrote: »

wow thanks for the advice

I do pay a mortgage and rent , but of course I get an income from tenants

I never wanted to be in this position , the property is a house which used to be my home , I had to relocate to go to Uni and couldnt sell it , so my only option was to rent it out and rent a property to live in

I have only just realised that I need to pay tax on the income , being a full time student on a bursary wasnt aware I had to pay tax , ok dumb maybe , I believe you can apply for excemption, will look into it

Thanks for the advice
Sally

Sadly, being a FT student doesnt not exempt you from paying income tax!

I know nothing about letting property so I can't help you. However, as demonstrated on other threads, andyandflo tends to give out highly inaccurate and very misleading advice. He has also advocated benefit fraud on several occasions, and it wouldn't suprise me if he does the same with tax dodging.

So beware!

Alias_Omega

Sally,

I believe you would declare the income from the Year 2008-2009 on the tax credit forms.


For the year 2010-2011, you dont know what profit you will have at the end of the year, so you cant put it down for anything. You might want to carry out repairs to the property, to the whole sum of the profit. So to speculate what you could earn in profit now from the let of the house, is pretty crazy.

There is always something that needs replacing