Accidental Landlord, Do I pay tax?

IAMIAM

Do I pay tax on rental income and sale value (when return and sell) if I own a property and subsequently move abroad for 2-4 years for work and the property is being rented out?
What about if I move elsewhere in the UK for work but rent a property and just still own one? I am reading conflicting bits from research that you don't pay CGT if you have moved for work and then sell/return. 

Do I pay CGT on a property I own (and sell in say 10 years) that I have rented out for 5 years and have subsequently bought another property as my main home?
Do I pay tax on both the rental income AND the sale value again as well as extra Stamp Duty. In effect, taxed three times. 

tom9980

Yes you will need to pay income tax on rental income.

Yes if you buy while still owning another property you will pay extra stamp duty but you can reclaim it if you sell within the time limits.

Yes you will need to pay capital gains tax should the property increase in value, HMRC have a calculator to help you work this out.

reefer37

Yes you pay tax on rental income.
yes you pay cgt if not your main residents
yes you pay extra stamp duty if you by a second home.
only way you won’t pay all three is if you rent out while abroad or renting else where then move back to your home and sell your house.

IAMIAM

Thats fine. Thanks for that. So in a nutshell, I do not pay CGT tax at all if I move abroad and rent the property out or indeed move around the UK but do not buy, subsequently returning and selling and keeping all the money?

[Deleted User]

IAMIAM said:

Do I pay tax on rental income and sale value (when return and sell) if I own a property and subsequently move abroad for 2-4 years for work and the property is being rented out?
What about if I move elsewhere in the UK for work but rent a property and just still own one? I am reading conflicting bits from research that you don't pay CGT if you have moved for work and then sell/return. 

Do I pay CGT on a property I own (and sell in say 10 years) that I have rented out for 5 years and have subsequently bought another property as my main home?
Do I pay tax on both the rental income AND the sale value again as well as extra Stamp Duty. In effect, taxed three times. 

How can you be an accidental landlord when it seems you are taking deliberate steps to let the property to tenants in exchange for rental income which of course is subject to income tax?  Will you be registering for the non-resident landlords scheme?  Will you be able to provide the tenants with an address for the serving of notices in England or Wales?

Why are you moving abroad for work?  This is important because  if your move abroad is an economic or lifestyle choice you made rather than because your employer is giving you no choice to work abroad for 2-4 years then you will not be able to claim CGT relief under the work related absence rules.  Therefore, the sale of the property could be liable for CGT.

You pay SDLT when you purchase a property in England.  Will you be purchasing a property in England?

IAMIAM

I'm sure you'll figure it out

DiamondLil

How can anyone be an 'accidental landlord' ?  How does becoming a landlord qualify as an accident ?  The landlord makes a conscious decision to either live in, sell or let the property he/she owns. 

IAMIAM

I have no idea, ring the government and ask them to change the term on all their tax sites too

SpiderLegs

I think there is some confusion here.
if you are a landlord then of course those taxes are payable, however the OP clearly states that they would be an ACCIDENTAL landlord, which means such rules do not apply.

Sometimes it is difficult for people to know whether they are genuine landlords or if it is by accident, which is why from November the government is introducing the accidental landlord scheme. Simply register your details on there and you will be exempt from most of the legal requirements. 

Of course if your circumstances change and you become a real landlord you have to leave the scheme.

Good luck OP!

davidmcn

IAMIAM said:

 ring the government and ask them to change the term on all their tax sites too

Which government sites use the term? I've had a quick search and can't see any. 

Grumpy_chap

You will need to pay income tax on the income received from the letting after deducting allowable expenses.

You will need to pay SDLT if you buy a second home.

You may be subject to CGT for the proportion of time that the home is let out versus your main residence.  There are some reliefs available, for short periods if the property has been your main residence.  Also, normal CGT reliefs still available.  For example, if you own and live in the property for 5 years, then let for 5 years, then live there for 5 years, when you come to sell, then 1/3rd of the gain is taxable (but reduced by the 'main residence relief').

The rules are quite complex and warrant engaging an Accountant to get everything correct (and be sure to get all reliefs available).

I love your thread title "Accidental Landlord - do I pay tax?"  If only doing something "accidentally" could absolve us of the associated tax liabilities, but I suggest it would be a universal get out:

• accidental sole trader, do I pay tax?
• accidental Ltd Co. Director, do I pay tax?
• accidental employee, do I pay tax?
• accidental Premier League Footballer, do I pay tax?
• accidental owner of Sports Direct, do I pay tax?