Tax on Renting Out a House

silentotter

I have been renting out a house I own since March 2013. Can anyone advice me if I need to pay income tax on this and if so how do I go about it? or can I just register as self employed and pay class 2 contributions?

I have a normal employed day job for which my employer deducts the normal tax and NI etc (I am a basic rate tax payer at 20%).

Can I put all expenses associated with my rental house against tax such as, mortgage, landlords insurance and estate agents management fee? It also cost me £1280 to get the house ready for rental can I put that against tax also?

The rent charged is £500 per month and my associated costs amount to £165 per month. Can anyone advise how much extra income tax I should be paying on that please?

Thanks

00ec25

https://www.gov.uk/renting-out-a-property/paying-tax

you should have declared this long ago as any internet search would have shown

the tax year runs 6th April - 5th April so you are now late in submitting the info for tax year 12/13 (final deadline was 31/1/14) and so will have to hope HMRC do not fine you

only the interest, not the capital element of a mortgage can be claimed as a cost

if your expenses are 165pcm (incl mortgage interest only) then obviously your taxable net profit is £335 and you will be taxed at whatever is your highest rate of tax , 20% or 40% or 45%

silentotter

We agreed a rental in March but didn't get our first months rent until the end of April which fits within the 13/14 tax year. Thanks for the link.

paddytt

Hi silentotter


if you are married/partnered and one of you pays less tax/no tax, then you could change the ownership to tenants-in-common with 100% of the shares in the lower-taxpayers name. Then the income is counted as theirs. That can significantly reduce the tax bill.


The cost should be around £100 + VAT - our conveyancing solicitor sorted it with our house purchase. Simples!


TT

00ec25

paddytt wrote: »

if you are married/partnered and one of you pays less tax/no tax, then you could change the ownership to tenants-in-common with 100% of the shares in the lower-taxpayers name. Then the income is counted as theirs. That can significantly reduce the tax bill.

The cost should be around £100 + VAT - our conveyancing solicitor sorted it with our house purchase. Simples!

have you notified HMRC of your income split using Form 17 otherwise they will continue to treat you as 50/50 which could land you in deep dodo if your wife has in the meantime submitted an invalid tax return
http://search2.hmrc.gov.uk/kb5/hmrc/forms/view.page?record=TS9D3da9t7I&formId=5159

pjclar02

00ec25 wrote: »

you should have declared this long ago as any internet search would have shown

Why?

00ec25 wrote: »

the tax year runs 6th April - 5th April so you are now late in submitting the info for tax year 12/13 (final deadline was 31/1/14) and so will have to hope HMRC do not fine you

Fine for what? Has a notice to file a tax return been issued? Is the OP required to notify chargeability?


The costs of bringing the property up to a habitable state appear, at first sight, to outweigh the rental income in the March 2013 period, so there would be no rental profit and no tax to pay, no requirement to notify chargeabilty and if no tax return was issued, to requirement to file and no likelihood of a fine.