Capital gains tax

michno8

Shall I start the ball rolling and start filling in tax returns from 2010 when the property was first lived in . I did do calculations at the time and nothing tax wise  was due and that was without writing anything down that I  had spent. So for example interest only mortgage was £160  a month . I did a proper tenancy with my daughter but charged her £160 a month  . I then put my earned  wages at the time in and it came that I owed nothing in tax.  That happened for a number of years until I had to retire on Ill health and I put her rent up to £350  a month . Did those calculations including my benefit money  and still owe nothing in tax. Now I've sold I have made a profit and need to pay CGT. Will I be penalised and fined heavily even though I dont owe any tax .  Shall I wait till I have filed my CGT form and then fill in tax returns ? Is there the property rental disclosure scheme still running ?  

Schwarzwald

michno8 said:

Shall I start the ball rolling and start filling in tax returns from 2010 when the property was first lived in . I did do calculations at the time and nothing tax wise  was due and that was without writing anything down that I  had spent. So for example interest only mortgage was £160  a month . I did a proper tenancy with my daughter but charged her £160 a month  . I then put my earned  wages at the time in and it came that I owed nothing in tax.  That happened for a number of years until I had to retire on Ill health and I put her rent up to £350  a month . Did those calculations including my benefit money  and still owe nothing in tax. Now I've sold I have made a profit and need to pay CGT. Will I be penalised and fined heavily even though I dont owe any tax .  Shall I wait till I have filed my CGT form and then fill in tax returns ? Is there the property rental disclosure scheme still running ?  

I am no tax expert neither but as others pointed out you cannot just subtract the mortgage costs from your rental income and then say both offset each other and therefore there is no tax due. Tax calculations dont work that way.

overall a bit messy, cant you get proper tax advise?

does your btl mortgage provider know/consented to you renting the property to a family member?

Mutton_Geoff

michno8 said:

Shall I start the ball rolling and start filling in tax returns from 2010 when the property was first lived in .

You can't do that. You can only file for three years prior to the current one, so four years total. Maybe a tax advisor might be needed?

sheramber

Voluntarily disclosure of  property income

https://www.gov.uk/government/publications/let-property-campaign-your-guide-to-making-a-disclosure/let-property-campaign-your-guide-to-making-a-disclosure

michno8

Unfortunately until the house sale is completed I haven't the funds to pay a tax advisor . For the  6 months while the house has been empty I have been paying 2 mortgages , 2 sets of utility bills , 2 lots of full council tax . It's been a nightmare with more to come by the looks of it. 

michno8

Thankyou Sheramber . I've just filled out the form for disclosure , hopefully I won't have to pay too much back when my income from rental was from £1920 per annum to the most,  £4200 per annum . That's without taking off repairs , house insurances boiler insurances etc . Replacing carpets , cooker hob , oven , fire etc I hadn't realised that you couldnt use interest only mortgage as an expense . I thought you could until a couple of years ago . It's been a nightmare 12 years and certainly not worth the stress .For some reason I thought you didn't have to pay tax on anything less than around £6000 . 

Mutton_Geoff

michno8 said:

Unfortunately until the house sale is completed I haven't the funds to pay a tax advisor . For the  6 months while the house has been empty I have been paying 2 mortgages , 2 sets of utility bills , 2 lots of full council tax . It's been a nightmare with more to come by the looks of it. 

What local council is it? Many give dispensation to vacant properties for 6 months if you notify them.

macman

diystarter7 said:

macman said:

You can claim improvements, not straight replacements. So replacing an old boiler would not be allowable. Installing double glazing to replace single glazing would be.
But I'd get your income tax sorted first...

Highlighted bit - even if it could not be repaired ie beyond repairs, surely not?  EG, boilers goes bang and you replace it with like for like or simlar surely you can claim?
Thanks in advance,

Replacing a failed boiler is maintenance/repairs, not an improvement. It doesn't add to the value of the property, as a property would be expected to have a working boiler. The idea is that you don't get hit for CGT on improvements that add value. But it doesn't subsidise your normal running costs.