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  • FIRST POST
    • dippa
    • By dippa 13th Mar 18, 9:18 PM
    • 16Posts
    • 0Thanks
    dippa
    Taxation rules for landlords?
    • #1
    • 13th Mar 18, 9:18 PM
    Taxation rules for landlords? 13th Mar 18 at 9:18 PM
    Just wondering, i'm looking to rent my flat out, which is paid for, to help pay for my mortgage for my house. Will this be taxed or can it be classed as none profit because it's being used to pay my other mortgage ?

    I believe I know the answer but hoping it's different to my beliefs lol
Page 1
    • G_M
    • By G_M 13th Mar 18, 9:27 PM
    • 44,056 Posts
    • 52,184 Thanks
    G_M
    • #2
    • 13th Mar 18, 9:27 PM
    • #2
    • 13th Mar 18, 9:27 PM



    (sorry!)
    • dippa
    • By dippa 13th Mar 18, 9:34 PM
    • 16 Posts
    • 0 Thanks
    dippa
    • #3
    • 13th Mar 18, 9:34 PM
    • #3
    • 13th Mar 18, 9:34 PM
    Haha wishful thinking. Thanks for clearing this up for me
    • 00ec25
    • By 00ec25 13th Mar 18, 9:48 PM
    • 6,379 Posts
    • 5,888 Thanks
    00ec25
    • #4
    • 13th Mar 18, 9:48 PM
    • #4
    • 13th Mar 18, 9:48 PM
    http://lmgtfy.com/?q=Taxation+rules+for+landlords
    • kinger101
    • By kinger101 13th Mar 18, 10:19 PM
    • 4,184 Posts
    • 5,669 Thanks
    kinger101
    • #5
    • 13th Mar 18, 10:19 PM
    • #5
    • 13th Mar 18, 10:19 PM
    If you pop in to your local tax office tomorrow, you can take the P155 form. Everything you need to know to offset the rent again the mortgage payments will be on there.
    • G_M
    • By G_M 13th Mar 18, 10:40 PM
    • 44,056 Posts
    • 52,184 Thanks
    G_M
    • #6
    • 13th Mar 18, 10:40 PM
    • #6
    • 13th Mar 18, 10:40 PM
    There's a tax office....?
    • tealady
    • By tealady 14th Mar 18, 5:31 AM
    • 2,775 Posts
    • 3,311 Thanks
    tealady
    • #7
    • 14th Mar 18, 5:31 AM
    • #7
    • 14th Mar 18, 5:31 AM
    If you pop in to your local tax office tomorrow, you can take the P155 form. Everything you need to know to offset the rent again the mortgage payments will be on there.
    Originally posted by kinger101
    LOL
    Proud to be an MSE nerd
    Judge people by their achievements, not by their mistakes
    • silvercar
    • By silvercar 14th Mar 18, 8:46 AM
    • 37,218 Posts
    • 156,807 Thanks
    silvercar
    • #8
    • 14th Mar 18, 8:46 AM
    • #8
    • 14th Mar 18, 8:46 AM
    He who laughs last...


    If you took out the mortgage on your house in order to keep the flat as a rental business (as opposed to selling the flat to take a smaller mortgage on your home), then the mortgage is a legitimate allowable expense of your rental business.

    You would need to be able to demonstrate, by the timings, that this was the purpose of the loan. There is no obligation for the mortgage to be secured on the rental property (or indeed anywhere).

    You can only claim the interest, not capital repayment and the amount is restricted to the value of the rental property when first let. There are also restrictions on the tax benefit of this that primarily effects higher tax payers.
    • kinger101
    • By kinger101 14th Mar 18, 8:15 PM
    • 4,184 Posts
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    kinger101
    • #9
    • 14th Mar 18, 8:15 PM
    • #9
    • 14th Mar 18, 8:15 PM
    He who laughs last...


    If you took out the mortgage on your house in order to keep the flat as a rental business (as opposed to selling the flat to take a smaller mortgage on your home), then the mortgage is a legitimate allowable expense of your rental business.

    You would need to be able to demonstrate, by the timings, that this was the purpose of the loan. There is no obligation for the mortgage to be secured on the rental property (or indeed anywhere).

    You can only claim the interest, not capital repayment and the amount is restricted to the value of the rental property when first let. There are also restrictions on the tax benefit of this that primarily effects higher tax payers.
    Originally posted by silvercar
    HMRC have recently been applying the wholly and exclusively test.

    https://www.accountingweb.co.uk/tax/hmrc-policy/hmrc-altered-guidance-to-deny-interest-relief

    OP should probably seek professional advice if they want to follow that path.
    • silvercar
    • By silvercar 15th Mar 18, 12:04 AM
    • 37,218 Posts
    • 156,807 Thanks
    silvercar
    HMRC have recently been applying the wholly and exclusively test.

    https://www.accountingweb.co.uk/tax/hmrc-policy/hmrc-altered-guidance-to-deny-interest-relief

    OP should probably seek professional advice if they want to follow that path.
    Originally posted by kinger101
    That example is different, in that the client was extracting money from the business at a later point. Here we are talking about the business funding structure at the start.
    • kinger101
    • By kinger101 15th Mar 18, 12:44 AM
    • 4,184 Posts
    • 5,669 Thanks
    kinger101
    That example is different, in that the client was extracting money from the business at a later point. Here we are talking about the business funding structure at the start.
    Originally posted by silvercar
    HMRC still might argue that a loan isn't wholly and exclusively for business purposes if the facts suggest it's taken out to purchase a residential property. The facts are very similar in that the inspector has argued the loan wasn't for the purpose of the letting business, but the purchase of a residential home.

    It seems HMRC are now ignoring their own manuals, and the taxpayer might not have a reasonable expectation that they can rely on them.

    https://www.taxation.co.uk/Articles/2017/10/17/337104/interest-relief-capital-withdrawn-business
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