Capital Gains Tax and Liability regards rent

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    Capital Gains Tax and Liability regards rent

    Hello,

    I wonder if anyone can explain the figures for me please.HMRC is hard to follow in areas.

    Scenario

    I have a 2 bed semi bought for £37750 in 1998.Let out property three years ago. Earning up to £34,000 personally at that time. I am trying to figure out if I am liable to tax if I now sell the house, or if i keep it, can i offset the mortgage against the rent as HMRC mention loans, or does the mortgage interest apply as a loan.

    Also, repairs, what qualifies.I understand improvements don't qualify.

    The rent, is it taxed at 22% dependant on personal income?

    There is another house bought for £170000 three years ago.Currently let at £725.00, only let 4 weeks ago.

    Does anyone know where I might stand. I am trying to work out my liability to tax if any. I lost my job a few months ago, so assuming personal income may afect the whole situation.

    Please can someone spell ou to me how tax works in this area, I find it a minefield,

    Much appreciated,

    Angela

    #2
    2 bed semi

    1. What is it worth?
    2. Have you ever lived there, if so from what dates to when?

    Another house

    1. Have you ever lived there, if so from what dates to when?
    2. £725 per week or month or year?

    Do you have any other income or properties? If so provide detail.

    Comment


      #3
      Have you ever filled in a tax return for the property that you have been letting for the past 3 years?
      I can take no responsibility for the use of any free comments given, any actions taken are the sole decision of the individual in question after consideration of my free comments.

      That also means I cannot share in any profits from any decisions made!

      Comment


        #4
        Thankyou both for responding.

        Yes, i have lived in both of the houses. i moved out of the first one in August 2007, and the other 31st March this year. I have never filled out a tax return as I was lead to believe it was dealt with automatically via my earnings(personal allowance).

        It's starting to dawn on me that something may not be right.ie should I be paying tax on the rental income, if so what, and does it change over the years. I really need to fix this if indeed there is anything to fix,

        Thankyou both very much,

        Angela

        Comment


          #5
          Oh dear. Yes, you should have been filling in a tax return and paying tax. There is no amount of rental income you can earn tax free.

          Best go and find a local accountant, fess up and get him to submit your returns for you. There'll be the tax to pay, and a bit of interest, but I doubt you'll suffer penalties other than the late filing penalties. Sooner you get it sorted the better.

          Comment


            #6
            I agree with Telometer - go to an accountant, the fees for which can be offset against some of your rental profits, it will save you a lot of time and energy.

            Are you also fully aware of all the other legal obligations placed on you as a Landlord? I'm not meaning to be rude, I just suspect that if that was your understanding of the tax requirements, then other obligations may be similarly confused.
            I can take no responsibility for the use of any free comments given, any actions taken are the sole decision of the individual in question after consideration of my free comments.

            That also means I cannot share in any profits from any decisions made!

            Comment

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