buy to let - never declared

cagey76

Hi,

I have had a buy to let for 3 years but as I have never had to fill in a self assessment tax form, I have obviously not declared the property.

To be honest it does not make a profit, and I would intend declaring it if I sold.

Should I worry about declaring this now ?

My wife has received a letter this week from Inland Revenue stating that 'they would like to help her pay the right amount of tax'. This has spooked us a bit.

Any help appreciated.

silvercar

(Particularly) If it does not make a profit, why haven't you been declaring the income?

You should have been accounting for the income and expenses and rolling over the losses each year.

Now that your wife has had a letter, either someone has reported her or the revenue is casting out lines. Either way, you now really need to declare the income and expenses. If you have never made a profit, I'm not sure if the revenue will impose a penalty (as the penalty is usually interest on the taxes not paid). There could be a fine of £100.

Now is the time to deal with it. You both need to contact the tax office(s) and explain that you have rental income but the expenses outweigh the income and so have incurred a loss (if that is what you mean).

On sale you would have a potential CGT liability rather than income tax. Different rules.

eileenfromplaistow

I agree that you need to declare the rental to the Revenue.
However, my husband received one of these letters this week, probably because of his pension contributions which were an estimate in his tax code.

Generali

Don't mess with HMRC. Call them and fess up. You've not been evading tax (from what you say) so no problemo. Just get everything above board. It's far easier that way.

cagey76

thanks guys, I hear you, and will get in contact HMRC shortly

Gorgeous_George

And don't be worried. The people at HMRC are very friendly and will advise what you need to do.

You'll feel so much better for it.



GG

Kez100

HMRC will treat you fine if everything is as you say. Do it now if you haven't already.

IveSeenTheLight

cagey76 wrote: »

Hi,
To be honest it does not make a profit, and I would intend declaring it if I sold.

Be aware that you can only claim against the interst occured against the property and any maintenance, advertising costs etc.
You cannot claim against the who mortgage payment.

But like the others, own up and sort it out before you are hit for a large bill over a longer period

cagey76

Hi, yep I can only claim the interest part of any mortgage payment, not the repayment part. The initial deposit was arranged by increasing my exisitng domestic mortgage, so I can also claim against the interest on that amount.

Maintenance charges, minor redecoration are obviously things for which I have original receipts. There must be more, for instance you can claim some transport costs involved in travelling to and from the property.

Recently had to purchase the lease, which wasn't cheap, I wonder if there is tax relief available on that ?

I will investigate more, but defintely have enough in the above to show an operating loss.

boyse7en

>>The initial deposit was arranged by increasing my exisitng domestic mortgage, so I can also claim against the interest on that amount

Are you sure about that? I would seriously doubt that tax relief is available on non-business related loans (i.e. domestic mortgage) even if they were used to raise capital to start a business.

SquatNow

If you morgaged you own home to fund the deposit you'll be hard pressed to show it's a business, so you'll probably end up paying a big tax bill.