Tax expenses when renting my house out

Taipan9177

Hi,
I have inherited a little house from my grandfather when he died but it is in a terrible state. Has to have a new bathroom, kitchen etc. plastering and decoration. I would like to rent it out after that as I would get nothing if I sell it. Am I allowed to claim for the new bathroom kitchen and the work that will be done on my tax return because I have been told once I rent the house out I have to fill in a tax return. I am working but don't earn very much.
Any Help would be gratefully received.

dorset_nurse

You can inform the council that the house needs work before it can be lived in to gain some months without paying council tax.
I believe you can claim back some expenses in your tax return, get some quotes/research into cost and ask an accountant to have a look for you. Good ones are worth their weight in gold

G_M

For links to all sources (including tax) related to renting out property, check here.

Marvel1

Taipan9177 wrote: »

Hi,
I have inherited a little house from my grandfather when he died but it is in a terrible state. Has to have a new bathroom, kitchen etc. plastering and decoration. I would like to rent it out after that as I would get nothing if I sell it. Am I allowed to claim for the new bathroom kitchen and the work that will be done on my tax return because I have been told once I rent the house out I have to fill in a tax return. I am working but don't earn very much.
Any Help would be gratefully received.

What would happen if say the boiler broke down, this must be fixed asap.

If you never rented before, there are laws to follow as a landlord:
http://www.direct.gov.uk/en/HomeAndCommunity/Privaterenting/RentingOutYourProperty/index.htm

00ec25

Taipan9177 wrote: »

Hi,
Am I allowed to claim for the new bathroom kitchen and the work that will be done on my tax return

a rental property is subject to 2 types of tax

a) income tax - this is payable on the net PROFIT you make from renting, ie gross rent less allowable expenses. Repairs such a plaster and decortaion are an allowable cost but improvments are not, new bath and kitchen is an improvement so not allowed. You WILL have to do an annual SA return once you start renting it out.

b) capital gains tax - you pay this when you SELL the property. It is payable on the gain in value since you inherited it (ie probate value). Any improvememts may be deducted from the gain to reduce you net taxable CGT gain when you sell. Be very careful with doing improvement work before you rent it out as this is not always allowed for tax purpose.

Given your lack of knowledge you would be well advised to consult an accountant. If money is that tight then there are certain works which you will not be able to claim for on your income tax return and will have to bear the full cost of those until such time as you sell the property and can then claim them agaiinst CGT

Taipan9177

Thank You so much for that advice it has been very helpful.

heretolearn_2

If you are struggling to find the money for the refurbishment - try contacting local housing associations/councils. Some of them have schemes whereby they will lease your house for say 5 years, refurb it at the start, and be respsonsible for all maintenance during that time. The rent you receive will be lower than you'd get direct from a tenant, but it's a lot less hassle and depending on how much needs to be done, you can end up better off overall.