A few tax queries

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    A few tax queries

    Hello all,

    A few tax queries would welcome your thoughts on.

    I had a tenant who damaged the kitchen/bathroom amongst other damages to the extent it needed a total replacement. Needless to say it required a court order to get them out. Even had the front door kicked in by the police that needed repairing (no receipt, cash ... I know bad idea ... police report sufficient in this case to prove the door was kicked in for a reasonable estimate?). I got my deposit back but that won't cover me for all the repairs.

    Now the thing is I bought a lot of items from a well known chain and put a lot of the expense on a store card and I've seen I've been getting charged interest and late fees that add up a fair bit...I know silly of me to let it get to that but that is my fault. However can the interest and late fees be offset against rental income for that year that the charges were incurred? The items on the store card were bought solely for the house I'm letting out ... although not entirely sure how you prove that i.e. that bath and toilet seat was for my buy to let house and not for my own. Also for this do you deduct against the year the expense was made (i.e. when I made the purchase) for those items you can such as new kitchen units or when the payment was made to the store card from my bank account?

    Secondly I am letting out the property now at a below market rate. This started in mid March. I understand I cannot carry losses over where you're charging a below market rate which is fair although what happens in this case where the property was let at market rate for pretty much nearly the whole year and then a few weeks at below market rate. Do you think it reasonable to carry over losses in such circumstances?

    Lastly, do you get penalised for sending in a tax return for past years even though you made a loss? I have made a loss for the past three years but will now (hopefully!) make a profit but would like to show the loss being carried over. I have never needed to fill out a SA previously or been sent a tax return so from what I understand was not obliged to send in a tax return for those years...just want to understand if I do, I won't get be penalised for it.

    Thanks in advance for your thoughts

    #2
    You need to do those tax-returns ASAP. Two main reasons...
    a) So you don't get fine by HMRC (stone me there's been enough publicity...) &
    b) So you can carry forward losses then offset future profits against those losses and pay less/no tax.

    See ASAP
    https://www.gov.uk/government/public...g-a-disclosure

    May be worth getting an accountant on board - one who specialises in private landlord matters
    I am legally unqualified: If you need to rely on advice check it with a suitable authority - eg a solicitor specialising in landlord/tenant law...

    Comment


      #3
      You need an accountant.
      When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
      Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

      Comment


        #4
        1. You should have registered for self assessment when first letting the property (or if your profit was less than £3000 you could just phone HMRC and they would sort it out over the phone).
        2. I don't see why you can't make a loss if charging below market rate - that's a new one on me.
        3. Get an accountant
        4. If you go through the Let Property Campaign for the years that you didn't submit a tax return you should be able to carry forward the losses.
        5. Are you sure you made a loss? Remember only the interest portion of the mortgage can be deducted from income.

        Comment


          #5
          Originally posted by michaelhill80 View Post
          Lastly, do you get penalised for sending in a tax return for past years even though you made a loss
          Yes.
          I have made a loss for the past three years but will now (hopefully!) make a profit but would like to show the loss being carried over.
          You need to submit tax returns to carry forward losses
          I have never needed to fill out a SA previously or been sent a tax return so from what I understand was not obliged to send in a tax return for those years.
          Unless HMRC have confirmed that you didn't, you did need to complete some kind of return.

          When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
          Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

          Comment


            #6
            Originally posted by jpkeates View Post
            You need an accountant.
            read this repeatedly until you contact an accountant...

            Comment

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