Deposit Refunded to Landlord as tenant did a runner - where on tax return???

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    Deposit Refunded to Landlord as tenant did a runner - where on tax return???

    Simple...

    renter did a runner and left property in a state, i (landlord) got the deposit in full and obviously spent out on repairing etc.

    Would the deposit be classed in my income?
    Obviously all expenses in other relevan fields of self assesment?

    Thanks

    #2
    Yes it is income, but what you spent it on will be maintenance expenses, so they will near enough balance each other out.

    Comment


      #3
      I don't think repairing damage is the same thing as maintenance though, is it?

      OP, make sure you keep receipts/invoices for everything you spend.

      If the amount of the deposit is more than any rent owed and the cost of rectifying damage caused by the tenant (is it?)i.e., if there is some money left over, then I do not think you can just spend it on maintenance (which you would have to do as a LL in any case, regardless of the way the T g treats the property).

      If there is anything left over I think strictly speaking it should be returned to the T.
      'Pause you who read this, and think for a moment of the long chain of iron or gold, of thorns or flowers, that would never have bound you, but for the formation fo the first link on one memorable day'. Charles Dickens, Great Expectations

      Comment


        #4
        Originally posted by mind the gap View Post
        I don't think repairing damage is the same thing as maintenance though, is it?
        the cost to maintain or repair damage, are "Overheads",

        A ligitimate expense.

        Comment


          #5
          Originally posted by mind the gap View Post
          If there is anything left over I think strictly speaking it should be returned to the T.
          Maybe from a very ethical commercial perspective that is a noble stance.

          From a tax perspective, the deposit withheld, often agreed before repairs, is simply a receipt of more rent.

          It may be the case that the tenant agrees to pay more (out of their deposit) than it costs the landlord to carry out the repair. e.g. The £100 received from tenant is added to rent received and the £75 paid for the repair is added to the repairs total. The landlord is then taxed on the £25 as income.

          It depends on the agreement made, in the same way as agreeing to pay £550 per month for a property when really it is maybe worth £500 per month - that is the landlord's gain, and acceptable if both parties have agreed to it.

          A nice landlord may however refund the difference, but most will probably keep it as an estimate of the cost of their time rather than just add up the cost of the materials/labour for the repair. The hassle factor.
          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


            #6
            Originally posted by ram View Post
            the cost to maintain or repair damage, are "Overheads",

            A ligitimate expense.
            I cannot think it is legitimate to claim tax relief on the cost of repairs when you have paid for them out of the tenant's deposit. It wasn't your money/earned income in the first place.
            'Pause you who read this, and think for a moment of the long chain of iron or gold, of thorns or flowers, that would never have bound you, but for the formation fo the first link on one memorable day'. Charles Dickens, Great Expectations

            Comment


              #7
              Originally posted by mind the gap View Post
              I cannot think it is legitimate to claim tax relief on the cost of repairs when you have paid for them out of the tenant's deposit. It wasn't your money/earned income in the first place.
              Hi MTG

              Not sure if you've missed my reply above?

              The landlord would have declared what was taken from the tenant's deposit as income on the tax return. If it was £50 cost and £50 taken from the tenant's deposit the rent received would go up by £50 and the repairs go up by £50.

              Net tax effect nil.
              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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