Financial Suicide??

Thrugelmir

Lisa1978 wrote: »

Because of that, i haven't been completing tax returns the last 2 years. Should i be and also would i actually be saving money on tax because of the loss?

Yes is the answer. As the losses can be offset future taxable profits from the same source of income, i.e. property letting.

Penalties can be incurred for non filing of self assessment returns even if no tax is due.

Lisa1978

Oh dear, thanks for that, i wasn't aware of same, i thought because i was making a loss then no returns were required. Should i contact the tax office now or start completing as from next April? Thanks again

PaulLuke

Hi Lisa,

I think your best bet would be to ask HMRC if they want you to provide backdated details (I suspect you'd be better off volunteering rather than seeing if they ask but that's just my opinion).

However, given that you are part repayment/part IO I'm not convinced you would be making a loss on the figures you're quoting as it's only the interest element that is allowable against tax. Also I suspect that the council tax is not an allowable expense, certainly whilst the property is being rented and am surprised that your tenant is not paying it themselves.

Lisa1978

PaulLuke wrote: »

Hi Lisa,

I think your best bet would be to ask HMRC if they want you to provide backdated details (I suspect you'd be better off volunteering rather than seeing if they ask but that's just my opinion).

However, given that you are part repayment/part IO I'm not convinced you would be making a loss on the figures you're quoting as it's only the interest element that is allowable against tax. Also I suspect that the council tax is not an allowable expense, certainly whilst the property is being rented and am surprised that your tenant is not paying it themselves.

I have been trying to ring them all day today, to no avail, can't get through! Will keep trying. I had no idea about the IO/repayment taxes, etc so i'm glad i've came on here! I have read up and rates are an allowable expense (i'm in N.Ireland, not sure if that makes a different as all one UK HMRC). I put the house up for £450 to include rates, therefore i pay the rates, not the tennant. Thanks again!