Keeping records for CGT and rental income separate ?

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

  • Jerome2020
    replied
    You've broadly got it! However, expenditure incurred up to 7 years prior to the commencement of a business activity are allowable for income or corporation tax purposes as though they had been incurred on the first day of the activity commencing provided they would have ordinarily been allowable revenue expenses.

    That basicially means that as long as the expenditure isn't capital (i.e. a loft conversion, extension or anything else that adds capital value), you will be able to deduct it from your rental income.

    An accountant would ordinarily keep one set of accounts and record all purchase costs and any ongoing capital costs on the fixed asset element of a balance sheet (useful for a future disposal) with all income and expenditure going through the profit and loss sheet. What you suggests does exactly the same thing though.

    Leave a comment:


  • theartfullodger
    replied
    Good. But it may be an old edition not up to date with all current regulations. It's republished every year...

    Leave a comment:


  • Always Problems
    replied
    theartfullodger,

    Thank you for the advice regarding the Tax.
    I looked up the book you recommended and found one on eBay at £2 delivered and in it my query is answered.

    Leave a comment:


  • jpkeates
    replied
    Originally posted by Another Fine Mess View Post

    Thanks, For some reason I thought that after a tenant left and a landlord needed to fit carpets and decorate those costs could be put against rental income, but costs incurred before any tenant moved in would not be.
    You can claim as long as the costs were incurred within 6 years of the first day of the first tenancy and they are allowed as though they had been incurred on that date.
    If we bought the house intending to put it up for sale after we had done it up, all the costs of improvements, carpets, decorating, would presumably be added to the house costs to reduce CGT. Perhaps I am splitting hairs.
    No, you're just wrong.
    If you'd bought the house intending to do it up to sell it, the gain would be income, not capital.
    So you'd have used all of the costs as an allowance against income tax, not CGT.

    Leave a comment:


  • theartfullodger
    replied
    Buy a book and understand tax options under today's rules

    Leave a comment:


  • Another Fine Mess
    replied
    Originally posted by jpkeates View Post
    The work to prepare a property for letting isn't usually all capital.
    Replacing carpets, painting and so on are all legitimate maintenance and repairs.

    Structural work might be either - it depends if you're adding capital value or simply making good.
    Thanks, For some reason I thought that after a tenant left and a landlord needed to fit carpets and decorate those costs could be put against rental income, but costs incurred before any tenant moved in would not be. If we bought the house intending to put it up for sale after we had done it up, all the costs of improvements, carpets, decorating, would presumably be added to the house costs to reduce CGT.
    Perhaps I am splitting hairs.

    Leave a comment:


  • theartfullodger
    replied
    Buy a book on property tax. It will save you more time & money than it costs to buy & read. e.g (there are other fine ones..)
    https://www.amazon.co.uk/gp/product/191102051X

    - but the rules on what is allowable against income tax and/or CGT keep changing: And with the HUGE costs of covid19 the chancellor - whoever, whatever party - will be changing taxes, and landlords aren't going to enjoy it....

    Leave a comment:


  • jpkeates
    replied
    The work to prepare a property for letting isn't usually all capital.
    Replacing carpets, painting and so on are all legitimate maintenance and repairs.

    Structural work might be either - it depends if you're adding capital value or simply making good.

    Leave a comment:


  • theartfullodger
    replied
    I'd keep everything , receipts, invoices etc etc etc spreadsheets, documentation together. You & I don't know what the rules will be in say 5 years time when eg new roof and/or replacement windows/central heating could move from one category of tax to another.

    There are at least 10 taxes a landlord may pay. Don't just worry about those 2!

    You say obviously but there's frequently nothing obvious about a chancellor's new plans

    Leave a comment:


  • Keeping records for CGT and rental income separate ?

    I recently bought a house to rent out. Am I right in thinking that I should do two sets of accounts.
    Account 1. CGT account, List the purchase price, solicitors fees, stamp duty, and all the repairs we had to do structurally, decorating, carpets, paint windows, etc So if the purchase price was say £200,000 pounds and we spent £12,000 on stamp duty, solicitors repairs the figure we would keep for future reference would be £212,000 and if sold in future at £250,000 we would pay CGT on £38.000. Providing we kept all the bills.
    Account 2. Running expenses while doing the place up to be set against rental income being Council Tax, Insurance, Gas safe certificate, Electrical Safety Check.
    Obviously should the tenant leave any decorating between tenants would be classed as repairs, but before a tenant after purchase its added to purchase price. ?

Latest Activity

Collapse

  • Changes to Landlords tax relief and landlords tax credit
    by cadence248
    Good afternoon all,

    I've been getting to grips with the changes to landlord's tax relief over the last few years. One thing that worries me considerably is that since all rental income is now taxed, and I must pay my loan interest and repayments out of this also, that really doesn't leave...
    02-07-2020, 15:11 PM
  • Reply to Changes to Landlords tax relief and landlords tax credit
    by jpkeates
    When you complete your tax return, you no longer deduct the interest (and any other finance related costs, e.g. a setup fee) you have paid as an allowable expense.
    You calculate the tax you would pay without that deduction (i.e. income less other expenses at the appropriate rate(s))
    Then...
    04-07-2020, 12:40 PM
  • Reply to Changes to Landlords tax relief and landlords tax credit
    by Kape65
    The 20% credit is automatically applied, you would have been getting it for the last 3 years!
    04-07-2020, 10:19 AM
  • Reply to Changes to Landlords tax relief and landlords tax credit
    by jpkeates
    The only people negatively affected by the change in how the interest can be claimed are higher rate tax payers and standard rate tax payers who were close to the higher rate threshold.

    For most landlords, the change is simply in how the tax is calculated, the outcome is the same.
    04-07-2020, 08:58 AM
  • Can we claim back the VAT?
    by 529 Charlie
    We are 3 Leaseholders each with a share of the freehold of our shared building. Purchase of our flats meant we also became Directors of a dormant Management Company. We need urgent maintenance/Major Works doing and wondered how and if we can claim back the VAT charged by the builder(s).

    ...
    03-07-2020, 18:13 PM
  • Reply to Can we claim back the VAT?
    by Gordon999
    Your lease should require the leaseholders to pay annual service charge contribution to the management company.

    To keep the non-profit making Management Company dormant which is easier for filing annual returns to Companies House, the service charge money collected from the leaseholders...
    04-07-2020, 08:18 AM
  • Tax Return
    by Brian862107
    Does anyone know of any good online tutorials/guides for filling out your self-assessment tax return? I don't know about you's but I hate filling out forms (they always ask you to tick a box to say the information you've put in is correct too!!)!

    This is my first year filling out the self-assessment...
    01-07-2020, 15:51 PM
  • Reply to Tax Return
    by Gordon999
    Revised figures for your situation ( for 12 months rent.)

    Annual rental income = £6000

    Buildings insurance = £0.

    Maintenance & Repairs = £100

    Letting agent = 12 x £60 = £720

    Total Expenses = £820

    Profit = £6000-...
    04-07-2020, 07:50 AM
  • CGT after selling my main residence
    by Echoes
    Hi there
    First of all thanks in advance for your reply. I would really appreciate if you can calify some of my confusion.

    I have few queries regarding selling my main residence which would impact on how much CGT I would pay...

    1. I am buying a new house to live so...
    02-07-2020, 14:14 PM
  • Reply to CGT after selling my main residence
    by doobrey
    I had thought it was something like that as well, until I looked it up.

    https://www.gov.uk/stamp-duty-land-t...property-rates
    04-07-2020, 07:36 AM
Working...
X