Tax Return Buy To Let

ben2004

1) I have been searching the forums for a few days and have been able to answer most of my questions I was wondering if someone could clarify a few points. I purchased a flat to rent out in November last year. Between November and the middle of February the property was empty while I decorated. My question is am I allowed to off set the interest on the mortgage against tax during this period.

2) The property I am renting out is unfurnished the only items inside are Laminate flooring, fridge freezer, washer/dryer and electric fire. One of the options on my tax return is to offset 10% wear and tear dose this include me as my property is rented unfurnished.

3) Can I offset any of the cost in buying the property like solicitors fees against tax or can I off set against capital gains when I sell the property.

Thanks for any input

Ben

payless

Worth speaking to the Inland Rev - they can be helpful , or try https://www.taxationweb.co.uk however my thoughts

are

1. Yes
2. yes
3. Capital costs

ben2004

Thanks for the quick response, I contacted my local tax office but they were little help they seemed to know less than me. But I have visited the website you recommended and there seems to be some good guides on there. Thanks

yonk

In answer to 2. flat does have to be furnished.

Have a look at the notes that go with the Land & Property pages of the Self Assessment Form - it gives guidelines on what is allowed etc.

You are allowed to set legal fees for buying/selling against capital gains. Legal fees for lease or management costs can be set against income.

You carry losses from BTL against BTL profits in the future. Cannot set against income as rents are classes ad unearned income, unless it is a holiday let.....

yonk

ooops, typo - should read "classed as unearned income"

payless

Yes , about question 2 -my tax guide reads

You can claim a deduction for 'wear and tear' on fixtures, furniture and furnishings if you let furnished property in the UK (but not furnished holiday accommodation - capital allowances are available on this type of property instead). If you have the option of claiming either capital allowances or wear and tear you must choose one or the other - you cannot have both. You can claim either:

the net cost of replacing fixtures, furniture etc. during the year, but not the cost of the original purchase (called the renewals basis), or

an allowance of ten per cent of the rent received after deducting charges or services which would normally be borne by a tenant but which you pay instead, such as service charges and water rates. This is known as a wear and tear allowance.

Once you’ve chosen a basis, you must stick to it

What I am not sure about is whether you could class your rental as furnished , as you are including some items