BTL Tax

jamesmann100

Hi all,

I've recently bought a BTL property, and have 2 questions on tax:

1. I rented it out in March 2016, and with the up front costs (estate agents admin, insurance, gas and elec certificates etc) I actually made a loss in the tax year of april 2015 - april 2016 as I only 1 month of rent. Does that mean that I just declare that I have no tax to pay on the property, or can that loss be offset on my own personal tax on income, reducing that liability?

2. I understand the new tax rules from April 2017 onwards (I think), such that by April 2020 I will not be able to claim any of my mortgage interest against tax, but will get a 20% tax credit on the mortgage interest the other way. But I'm not sure how that works in the first year (April 2017 - April 2018) when 75% of the mortgage interest can be claimed, does that mean you still get the 20% tax credit, meaning that although you can only claim 75%, getting 20% back the other way means that the tax will be pretty similar to Apr 2016 - Apr 2017? But let me know if I've misunderstood the rules, which is quite possible!

Thanks

James

HappyMJ

jamesmann100 wrote: »

Hi all,

I've recently bought a BTL property, and have 2 questions on tax:

1. I rented it out in March 2016, and with the up front costs (estate agents admin, insurance, gas and elec certificates etc) I actually made a loss in the tax year of april 2015 - april 2016 as I only 1 month of rent. Does that mean that I just declare that I have no tax to pay on the property, or can that loss be offset on my own personal tax on income, reducing that liability?

2. I understand the new tax rules from April 2017 onwards (I think), such that by April 2020 I will not be able to claim any of my mortgage interest against tax, but will get a 20% tax credit on the mortgage interest the other way. But I'm not sure how that works in the first year (April 2017 - April 2018) when 75% of the mortgage interest can be claimed, does that mean you still get the 20% tax credit, meaning that although you can only claim 75%, getting 20% back the other way means that the tax will be pretty similar to Apr 2016 - Apr 2017? But let me know if I've misunderstood the rules, which is quite possible!

Thanks

James

You enter all of the figures on your tax return that you are required to complete. If your figures show a loss you need to put that down. You can then carry forward that loss to reduce the tax payable on your future profits from letting property.

Paulosomerset

Hiya

1. I am not an expert but you can do something with losses - I have been reading loss the last few days - but didn't take it in as it does not apply to me (luckily!). I am guessing you can either directly reduce your in-year liability OR carry the loss over I to subsequent periods to be used against any btl gains.

2. The telegraph has a very good online tax calculator specifically built to show the effects of these changes

Give it a go - it's good.

But in reality - you apply a reduction of 25 / 50 / 75% of the mortgage interest in the three tax hears that take you from now untill 2020/21

Hope you get it sorted - shout if you are stuck as I have built a nerdy spreadsheet for mine!

Paulo

anselld

Paulosomerset wrote: »

I am guessing

That is not a good way to do your tax return!

Paulosomerset

Hi anselld

I've really enjoyed joining the forums today - and yours is my first reply! How exciting!

I did try and stress to the OP that I had not read it and understood the guidance in detail - as it did not apply to me

So I would hope that the OP gets your type of comedy - and indeed reads up on it before entering any loss on his / her tax return!

I certainly won't be guessing, as I don't have any losses to report

Paulosomerset

Go to

gov.uk/guidance/income-tax-when-you-rent-out-a-property-working-out-your-rental-income#losses[/url]

Paulosomerset

But put www. Before it!

I cannot post links