Can I get tax back?

ChinUp_2

Hi,
Can anyone give me advice. I work full time and also have just started renting my house out. With the tax on my rental income I won't have to pay any - in fact I would be making a loss.
Someone mentioned that there is a way I can claim back some tax from my full time job to make up for the loss on my rental income. Is this correct, does anyone know what I need to do?
Thanks

yelf

No you can't

Mini_Bear

you have to declare all your income and pay tax on the rent even if you make a loss (you will make a larger one). The only instance in which you wouldnt pay tax on the rental income is if you were set up as a company (you could then offset this loss against future profit).

chrismac1

You should declare the rental source and you'll need to register for self-assessment to do this. You say "renting my house out" - which suggests you may still be living there and just renting out part of it, in which case the Rent a Room rules are normally the way to pay the smallest amount of tax on your rental profits.

You say you're making a loss on the rentals. This can only really be the case if you've spent a lot of money on the property refurbishing it. In which case you have to be very careful, if any of this amounts to an improvement to the property it is Capital and you get tax relief on the spend only when you sell it. Full details on my website and many others too.

If indeed you have got a bona fide tax loss in year 1 - which is not unusual as many new renters spend a decent sum putting their properties in good nick to rent out - you can carry this loss forward to future year profits from the property. This will not affect this year's tax bill but will keep down future years'.

If this is a Furnished Holiday let - which I very much doubt - you can claim relief for a loss against your current year income. So if you have a full time PAYE job this results in a repayment of some of the tax paid under PAYE. This is probably where the tip from the "someone mentioned" element came from.

dori2o

chrismac1 wrote: »

You should declare the rental source and you'll need to register for self-assessment to do this. You say "renting my house out" - which suggests you may still be living there and just renting out part of it, in which case the Rent a Room rules are normally the way to pay the smallest amount of tax on your rental profits.

You say you're making a loss on the rentals. This can only really be the case if you've spent a lot of money on the property refurbishing it. In which case you have to be very careful, if any of this amounts to an improvement to the property it is Capital and you get tax relief on the spend only when you sell it. Full details on my website and many others too.

If indeed you have got a bona fide tax loss in year 1 - which is not unusual as many new renters spend a decent sum putting their properties in good nick to rent out - you can carry this loss forward to future year profits from the property. This will not affect this year's tax bill but will keep down future years'.

If this is a Furnished Holiday let - which I very much doubt - you can claim relief for a loss against your current year income. So if you have a full time PAYE job this results in a repayment of some of the tax paid under PAYE. This is probably where the tip from the "someone mentioned" element came from.

Also don't make the mistake many people make when renting out a house when it comes to offsettins mortgage payments against rents. You can only claim the intrest part of the mortgage payments as an expense, so if you have an intrest only mortgage then thats OK you claim the full cost, but, if it is a repayment mortgage where some of your payment is paying off the loan and the other is paying the interest on it then it is only the interest part that is allowable.

ChinUp_2

Sorry I've not explained my situation very well. I am renting out my whole house (not just a room). The rental income doesn't quite cover the interest part of my mortgage (repayment mortgage) so am I correct in thinking I won't have to pay tax on my rental income? Also someone told me you can offset the rest of the loss (interest part of mortgage) against your other income? Does anyone know what I mean? Thanks:)

dori2o

ChinUp wrote: »

Sorry I've not explained my situation very well. I am renting out my whole house (not just a room). The rental income doesn't quite cover the interest part of my mortgage (repayment mortgage) so am I correct in thinking I won't have to pay tax on my rental income? Also someone told me you can offset the rest of the loss (interest part of mortgage) against your other income? Does anyone know what I mean? Thanks:)

If your rental income does not cover the interest on the mortgage payment then no you will not have to pay tax as you will have made a loss.

Losses on property income can only be offset against profits on property income. I.e. if you make a loss, you can carry it forward each year until you make a profit and then you can offset the loss against that profit, therefore reducing tax liability on proprty income in a future year.

aurorahelios

Despite making a loss you still have to fill in a self assessment. The calculation is basically rental income minus mortgage interest payment,landlord insurance etc if this is a loss then no there is no tax liability in that tax year. losses on property can not be transferred to other income only carried forward to the next tax year to be offset against future property income. If you are making a loss though i think you should really question if this is a viable idea.