Can renovation costs be offset against rental income the following tax year.

Dave_the_Slave_2

My first post here hello.

I have rental tax question about whether renovation costs in one year can be offset against rental income the next year.

I am a non UK resident and bought a UK property in March 2011.
The property needed considerbale renovation and was only ready to rent in July 2012.

As a non UK tax payer I have now been asked to fill in a NRL1 (non resident landlord) to allow tax to be paid net by my agency. I will then need to make a tax declaration next year for 2012/2013.

So basically will the renovation costs which were incurred in 2011/2012 when I did not make a tax declation, be able to be offset agianst rental income in my 2012/2013?

Sould I make a tax declaration for 2011/2012 even though I received no income in the UK but incurred considerable renovation costs?

Many thanks
Dave the Slave

martinsurrey

Dave_the_Slave wrote: »

My first post here hello.

I have rental tax question about whether renovation costs in one year can be offset against rental income the next year.

I am a non UK resident and bought a UK property in March 2011.
The property needed considerbale renovation and was only ready to rent in July 2012.

As a non UK tax payer I have now been asked to fill in a NRL1 (non resident landlord) to allow tax to be paid net by my agency. I will then need to make a tax declaration next year for 2012/2013.

So basically will the renovation costs which were incurred in 2011/2012 when I did not make a tax declation, be able to be offset agianst rental income in my 2012/2013?

Sould I make a tax declaration for 2011/2012 even though I received no income in the UK but incurred considerable renovation costs?

Many thanks
Dave the Slave

I'm not 100% up on the scheme, but if you dont do a full UK income tax self assesment you wont be able to claim the expenses back. Under The Non-resident Landlords Scheme your agency can only deduct expenses they have paid on your behalf, not ones that you have paid directly.

So, in order to claim them back your going to have to jump through a lot of expensive hoops to become a tax registered non dom, and you'll need proper (expensive) advice for that.

Edit*

if you do do a full UK tax return, you should be able to claim the renovation costs, but a good deal of knowledge about what is eligable and how to claim it will be needed, again professional advice!)

gastroboy

Look here:

http://www.hmrc.gov.uk/manuals/pimmanual/index.htm

It has all the info you need.

00ec25

Dave_the_Slave wrote: »

As a non UK tax payer I have now been asked to fill in a NRL1 (non resident landlord) to allow tax to be paid GROSS by my agency. I will then need to make a tax declaration next year for 2012/2013.

if you are completing an NRL1 then you are a[pplying to receive the rental income gross, ie without tax deducted

the default position, ie where no NRL1 has been applied for, is the LA must deduct tax (ie you get paid net). If HMRC has accept an NRL1 application then HMRC will instruct the LA tha the LA no lionger needs to deduct tax as the LL is now accountable for payment of tax themselves

Dave_the_Slave wrote: »

So basically will the renovation costs which were incurred in 2011/2012 when I did not make a tax declation, be able to be offset agianst rental income in my 2012/2013?

it depends on whether any of the costs are capital in nature rather than revenue expenditure. If its all revenue then its treated as pre trading expenses and can deducted from the renatl business in its first year of trading

Dave_the_Slave wrote: »

Sould I make a tax declaration for 2011/2012 even though I received no income in the UK but incurred considerable renovation costs?

no, you make a tax return for 12/13 assuming that is the year in which the rental business started trading. You then claim any pre trading expenses against 12/13 income to calcualte your net profit for the 1st year of trading, if that creates a loss then you carry the loss forward against profits arising in future years

the NRL link posted above is wrong, the correct link is here
http://www.hmrc.gov.uk/international/nr-landlords.htm#4

00ec25

martinsurrey wrote: »

So, in order to claim them back your going to have to jump through a lot of expensive hoops to become a tax registered non dom, and you'll need proper (expensive) advice for that.

no , you are confusing non resident with non dom

the NRL is based on the rules for usual place of abode, it has nothing to do with whether someone is a non dom for tax purposes

Dave_the_Slave_2

Many thanks for the answers what a great forum.

Yes of course I should have written Gross not Net.

I shall read through all links.

cheers

giggling

Hi, I'm getting a rent on a second property and I am a UK resident. Anybody know if I can offset renovation and ground rent etc. against tax?

tim123456789

Renovation - no

Repair - Yes

Ground rent - yes

Fire_Fox

giggling wrote: »

Hi, I'm getting a rent on a second property and I am a UK resident. Anybody know if I can offset renovation and ground rent etc. against tax?

http://www.hmrc.gov.uk/manuals/pimmanual/