Buy to let

MastersStudent

Mr.Generous wrote: »

tax return asks if you have any income from property, its always going to be a sticking point.

Thanks for your response. We're not self-employed so haven't filled in tax returns. I think perhaps we need to declare it and find out that way, but we will probably need to sell if it is taxable. My husband had been dealing with this until recently (house is in his sole name, as bought before we met) but I'm not sure he covered all bases.

CKhalvashi

MastersStudent wrote: »

I'm not sure if only the new rules we'll be allowed to or if only interest counts? Thanks for your reply.

I don't believe you ever have been allowed to use the capital as a business expense. Definitely not in the last 10 years anyway.

Thrugelmir

MastersStudent wrote: »

Thanks for your response. We're not self-employed so haven't filled in tax returns. I think perhaps we need to declare it and find out that way, but we will probably need to sell if it is taxable. My husband had been dealing with this until recently (house is in his sole name, as bought before we met) but I'm not sure he covered all bases.

Losses can be carried forward to future tax years and offset against profits (from the same trade i.e. rental income).

kingstreet

MastersStudent wrote: »

Thanks. Our current mortgage interest is only £25 less than the amount we receive in income. We then separately overpay by £200 a month plus pay for repairs, which has been £500 this year.

Along with mortgage interest, some repairs/renewals, insurance, letting agent fees etc are allowable expenses so if your rent is only £25 above your mortgage interest, you are probably correctly not making a profit.

However, you may still need to declare this to HMRC so that any earlier losses can be offset against future profits (as Thrug said) should the situation change.

wolfplayer

MastersStudent wrote: »

Thanks for replying, that's all covered, we have letting agents managing it and they kept us right registering everything at the beginning and our insurance covers it.

It's possible they've reported your ownership to rental to HMRC.

Income is income, even if you're not making a profit. Most likely the tenants are paying you from their taxed income.

http://www.taxassist.co.uk/resources/show-article/title/hmrc-forces-letting-agents-to-reveal-landlords-details/id/48

AnotherJoe

MastersStudent wrote: »

I couldn't sell my house in Scotland, so we've been letting it, technically making £25 a month profit, but with paying for repairs plus making mortgage overpayments every month, it is about £2k a year loss. The house is probably now worth the same amount as is left on our mortgage. We've never declared it to the taxman, because we don't make a profit. Do we need to? With the new rules coming in, will we have to pay income tax (my husband pays 40% tax, so it would be a killer). Thanks for any advice anyone can offer.

The overpayments have got nothing to do with increasing the loss. Those payments increase the equity you'll get back when you sell, and they cannot be counted towards profit or loss because they don't affect it,