Property Losses Against Employment Income

Axel

My son has some unclaimed property losses for the past few years. Basically a house bought before the 2008 crash, and now in negative equity, has been rented out for about three years and the mortgage payments, agents fees and insurance have been greater than the income resulting in a net loss for each year. He has been in full time employment and on PAYE during this is period and has not done a tax return.


Can the accumulated losses for each year be brought forward and offset against his tax due for this year, possible dropping him out of the 40% tax band?


Axel

Pennywise

Axel wrote: »

Can the accumulated losses for each year be brought forward and offset against his tax due for this year, possible dropping him out of the 40% tax band?

No, the losses can only be set against future property income, so to get any tax relief, he'll have to start making a profit on letting his property.

Also, just want to check that you're aware it's only the interest portion of the mortgage repayments that are an expense for tax purposes - the capital element isn't allowable. So his "expense" should be just what is shown as interest on the mortgage statements.

00ec25

Axel wrote: »

has been rented out for about three years and the mortgage payments, agents fees and insurance have been greater than the income resulting in a net loss for each year. He has been in full time employment and on PAYE during this is period and has not done a tax return.

I assume his total rental income is less than £10,000 otherwise he is required to do a tax return even if he makes a loss

even if his net profit after costs is less than £2,500 profit (or as in his case is negative) he is still required to inform HMRC (by letter rather than by tax return) that he has rental income and should have submitted the figures each year