tax on let period during ownership of Property

Habib2342

Hello,

i'm thinking of potentially selling my property but before I commit to the conveyancing process with a buyer I think I may have a retrospective income tax liability as during the last 11 years of ownership I let the property out whilst living at my mum's house for 58 months during 2 separate periods. I've worked out the profit during both periods is £10,200.

Will I be taxed on this when I go through the conveyancing process and will show up on the completion statement once the sale goes through ?

thanks,

G_M

Your income tax liability is unconnected with your sale.

By not declaring the income in the relevant tax years, you have been guilty of tax evasion.

Make a voluntary declaration to HMRC - they may charge interest and/or a late payment fee, but that's far better than them coming after you for tax evasion.

Make sure your calculation of the 'profit' is based on the tax rules. What HMRC consider 'profit' may not be the same as what you consider profit.

theartfullodger

You should have declared that income to HMRC. Even if making a loss.

As you weren't living there, when you sell there may also be some CGT to pay on proceeds: Presumably you know the market value of the property at the start and end of each period you weren't living there. If not those nice people at HMRC will estimate for you.

Re. income tax see this advice
https://www.gov.uk/government/publications/let-property-campaign-your-guide-to-making-a-disclosure/let-property-campaign-your-guide-to-making-a-disclosure

There will probably be fines and penalty for your flouting the very well understood laws on declaring income.

Why on earth did you think you were above the law? Anything else you have "forgotten", please?

steampowered

Income tax is charged on the whole rent, not just the 'profit' (subject to allowable deductions).

00ec25

Are you perhaps confusing income tax and CGT?
If not, then 58 months or nearly for 5 years gives you 2 problems:

Income Tax as stated above, come clean and pay the income tax you owe

if you want to continue evading then take a chance, but is it really worth wondering for the next few years if someone won't dob you in anyway?

just come clean and follow the instructions here:
https://letproperty.campaign.gov.uk

CGT

having paid your income tax you also need to work out if you have to pay any CGT as that is the tax payable when you sell. However, unless 5 years represents a large part of your overall ownership period, it is less likely you will have to pay any tax, although you must still do the calculation to confirm that.

read the instructions here:
https://forums.moneysavingexpert.com/showpost.php?p=73621764&postcount=2

00ec25

steampowered wrote: »

Income tax is charged on the whole rent, not just the 'profit'.

utter rubbish

it is charged on the PROFIT (do you know how to use google? here is a starter for you: https://www.gov.uk/renting-out-a-property/paying-tax )