Landlord tax implications....basics

[landlordmrjim]

Hi,

Myself and the wife are renting a property we jointly own, although she is the landlord on the documents. Where is the best to start to understand the tax liabilities. We haven't looked into this at all and I'm concerned we could be hit with a tax bill.

We are:

- working full-time (wife 4 days only)
- renting through an agency
- have some receipts for maintenance work carried out before we started renting to get the house ready/maintenance while renting etc
- been renting continuously since August 2012
- UK resident

Apologies this is a very basic level question, but any help much appreciated.

[Gordon999]

You + wife ( as 50% owners) each have to submit a tax return for the 50% share of rental profit during the period from August 2012 to 5th April 2013 ( and submit before 31st Jan 2014 by online return or 31st Oct 2013 by paper return ).

You can calculate the total rental income from 8 months rental statements and the total allowable expenses ( including repair costs , LA fees , house insurance cover and mortgage loan interest ) and divide figures by 2 for the figures to enter on yours + wife's tax returns.

You can inform the tax office by letter under your existing tax ref or submit a Form SA105 ( download form and SA105 notes from hmrc website ).

[landlordmrjim]

Gordon,

Thanks for the reply. Some of the repair work could have been in preparation for rental, I.e. in the days before the tenancy started. Are these receipts still valid, or must the work have been carried out during the tenancy?

[King_Maker]

Qualifying pre-rental expenditure is allowable for up to the previous 7 years. It is deemed to have been incurred on the first day of letting.

[landlordmrjim]

'Incurred'....how is this defined in this context?

[graham123]

Incurred in this context means that you paid it.

[landlordmrjim]

So if the date of the receipt is prior to the first day of tenancy, it's of no use?

[King_Maker]

So if the date of the receipt is prior to the first day of tenancy, it's of no use?

No, it can be allowable - that's why it is called pre-rental expenditure.

http://www.hmrc.gov.uk/manuals/pimmanual/pim2505.htm