Renting out

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  • Renting out

    I have rented out my house for last 15 months approved by my mortgage provider.the rent of 240 PCM does not even cover the mortgage,never mind building insurance and gas cert.i didn't think I needed to inform hmrc but a friend of mine advised me to do so.i am now scared still that I havnt and that I will get a massive fine.how do I do this?

  • #2
    You declare it on a tax return. I believe you're only liable to pay tax on the income minus the interest of your mortgage and any other legitimate costs. I have asked that a mod move this post to the finance section of the forum (please do not repost there!), where you'll get given proper advice.
    [I]The opinions I give are simply my opinions and interpretations of what I have learnt, in numerous years as a property professional, I would not rely upon them without consulting with a paid advisor and providing them with all the relevant facts[I]

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    • #3
      Yup, contact HMRC and start the process TODAY - if HMRC hear from someone else (eg tenant..) I suspect you are more likely to be fined...

      There's another reason you WANT to do a return: If you make a loss you can carry that loss forward to some year in the future when you make a profit, offset loss against that profit & PAY LESS TAX!!!

      Cheers!
      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...

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      • #4
        Fordka,

        Just telephone them and tell them. They will be OK with this small amount. You aren't obliged to fill in a self assessment form if the profit is below £2,500 per year but you do have to notify them you are letting out.

        And before I get shot down in flames, this happened a couple of years ago to my other half. The following year (last year) he was sent a paper SA return to complete. He completed it about 6 weeks late and got fined £100.

        I sent the fine back with a print out from their website which stated the facts. They cancelled the fine.

        Comment


        • #5
          Claymore,

          This is interesting, do you have a reference for the £2500 limit?

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          • #6
            https://www.gov.uk/renting-out-a-property/paying-tax

            Comment


            • #7
              It says income, not profit

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              • #8
                Why are you letting it for less than the mortgage and insurance?

                Comment


                • #9
                  Originally posted by badbobby View Post
                  It says income, not profit
                  It is actually after allowable expenses. There is another link which I can't find, which is from the gov.uk website but in the meantime, you can have a look at this link:

                  http://www.taxfix.co.uk/forum/articl...d-revenue.html

                  Comment


                  • #10
                    Fordka30,

                    Starting about 15 months ago probably means you commenced letting from Nov 2011. So in theory you should be submitting a tax return ( Form SA105/ 2012 ) and declaring your rental income and expenses for 5 months up to 5th April 2012.

                    Note - The rental income and expenses for current 12 months upto 5th April 2013 is submitted in the 2012/2013 tax return after May 2013.


                    So write a letter to hmrc ( similar to the sample below putting in your actual figures ) -


                    Dear District Tax Officer ,

                    I wish to inform you that I started letting out my house at ( address) from 1st Nov 2011 .

                    The monthly rent received was 240 PCM but since allowable expenses exceeded the rental income, I had a calculated loss for year ending 5th April 2012 as shown below:

                    5 months Rent received = 1200

                    total Expenses = 1500 say ( mortgage loan interest+ Bldg Insurance + gas certificate )
                    Loss for year = 300 .

                    Please advised the correct form to declare this loss .

                    yours sincerely,

                    Comment


                    • #11
                      Originally posted by Claymore View Post
                      It is actually after allowable expenses. There is another link which I can't find, which is from the gov.uk website but in the meantime, you can have a look at this link:

                      http://www.taxfix.co.uk/forum/articl...d-revenue.html

                      Whilst being on the phone for an hour today with HMRC re a coding issue, I spoke to a manager about the self assessment limit.

                      He confirmed that it is net income, so Claymore is correct. You just need to write to HMRC in Liverpool with a P&L.

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                      • #12
                        Originally posted by badbobby View Post
                        Whilst being on the phone for an hour today with HMRC re a coding issue, I spoke to a manager about the self assessment limit.

                        He confirmed that it is net income, so Claymore is correct. You just need to write to HMRC in Liverpool with a P&L.
                        I wonder how many landlords are doing unnecessary self assessments - or worse still, paying someone to do it for them!

                        Comment


                        • #13
                          Originally posted by Claymore View Post
                          I wonder how many landlords are doing unnecessary self assessments - or worse still, paying someone to do it for them!
                          I was one!

                          I'm an accountant and cannot stand the tax system, so I have no idea how non trained folk cope...

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