Tax help on 2nd home required

toloy2k

Hi
I have a 2nd home with no mortgage and do not rent this out at present. I am single and have no children and i am on the highest tax banding at present on PAYE
I have outgoings on the 2nd home of 150% council tax as that council charge for the empty property, water connection and electricity connection along with higher insurance for an unoccupied property. The HMRC have stated that if i rent the property out i will be taxed on the full income at the higher tax rate and if i sell the property i will have to pay capital gains. I spent 25 years paying a mortgage and paying the interest on this mortgage. I did rent the property out and to redecorate the property to get it back to a livable state has just cost about £6k. I will now have monthly outgoings but if i rent will not make much income off the property and dont see the worth and hastle in it. Can any one advise if there is a way to claim back the cost of maintain the property without anyone living there
regards

BoGoF

No......why should there be.

toloy2k

why because there seems to be for everyone else who has kids, who is married, who is on benefits etc

Pennywise

toloy2k wrote: »

why because there seems to be for everyone else who has kids, who is married, who is on benefits etc

No, they can't claim tax relief against their home expenses either.

If you rent it out, you'd be able to offset most of the property costs against the rental income. You don't pay 40% income tax on the rents, you pay tax on the profit, i.e. rents received less allowable property expenses.

csgohan4

toloy2k wrote: »

why because there seems to be for everyone else who has kids, who is married, who is on benefits etc

The key difference is you can claim if it is for a business purpose, the above examples are not and smells of entitlement and snobbery


OP can you confirm why the tax payer should be funding your second house? is it a business ? is it a charity? Are you entitled? Not a lot of the above examples have 2 homes.




OP you need to do some more research


https://www.gov.uk/guidance/tax-free-allowances-on-property-and-trading-income#property

Skyhigh

Could you set up a LTD company, move the property into the company as a revenue generating asset and rent it out, with the income accumulating in the the business - which you could then choose to:
A) Invest in more property
Pay as dividends
and if you get a partner or have children who join as directors, such as non-voting directions - also (C) Pay them dividends.

FYI - The above would need checking through, but seems to follow the advice of a few articles I read in recent years.

Ideally you'd probably want multiple revenue generating assets (e.g. shares or other property) to demonstrate the company is legitimate and not a tax dodge.

Skyhigh

toloy2k wrote: »

why because there seems to be for everyone else who has kids, who is married, who is on benefits etc

I'll just clear this up a bit for your reference.

Long story short, if one of you earns over around £50k per year - lots of things go out of the window. Including:
- Any income related benefits / working tax credits
- Child maintenance
- Marriage allowance (/ not worth the hassle)
> And as you may be aware, over £100k, there's a taper to your Personal Allowance, hence better to look at Salary Sacrifice, etc - which is the best you'll probably get in terms of direct salary/benefit.

I highly recommend you talk to a Wealth Manager who can help you make the most of your existing assets, future earnings, etc.

If you find someone who knows their stuff - they can help you, even if you think you're "on top" of all the options. Impressive people. Usually they work on a fee-free commission basis also.

Wayne_O_Mac

Skyhigh wrote: »

Could you set up a LTD company, move the property into the company

That would be a disposal and would trigger the CGT charge.

uknick

Skyhigh wrote: »

Could you set up a LTD company, move the property into the company as a revenue generating asset and rent it out, with the income accumulating in the the business - which you could then choose to:
A) Invest in more property
Pay as dividends
and if you get a partner or have children who join as directors, such as non-voting directions - also (C) Pay them dividends.

FYI - The above would need checking through, but seems to follow the advice of a few articles I read in recent years.

Ideally you'd probably want multiple revenue generating assets (e.g. shares or other property) to demonstrate the company is legitimate and not a tax dodge.

Problem with that will be CGT and SDLT (which I believe attracts the extra 3% regardless if it's the first property) and the cost of running the company. Also, depending on how much profit is made, you could end up paying more in income/corporation tax. But, this could be mitigated, as you have said by splitting the dividends up to make the most of the personal dividend allowance.

uknick

toloy2k wrote: »

why because there seems to be for everyone else who has kids, who is married, who is on benefits etc

I'not aware of many people with two properties who can claim benefits, unless they're the non means tested ones.

Dazed_and_confused

There are some claiming tax credits as there have been some queries on the benefits board about the changes to claiming finance costs as an expense.

Although this is being phased out for income tax the benefit rules seem to be unchanged so you can have a lower profit for tax credit purposes than you will have for income tax purposes.