Renting below market rate

[insightforthe]

Hi,

I having been renting out a property i have, to a mate, for below market rate. Last year for a couple of months, i received less rent than agreed due to unforeseen circumstances.

So I should have received £17400, but only received £15,400, so I am in deficit of £2k. As I only received £15,400, that is what I am declaring. Can the tax man come after me for the 2k, that was not paid to me (and i do not have), even though per year I should be declaring an income of £17400 (as per the tenancy agreement)

thanks

[MrShed]

No they can't.

[theartfullodger]

Alternatively (what I do..) is I declare all the rent I SHOULD get, then under "other expenses" include bad-debt, unpaid rent, in your case £2k.

If you later get this, or some, add to rental income amount.

Sincerely hope you are evicting "friend" and suing him, small-claims, for the £2k.

Many, including me, never rent to friends or relatives.

[jpkeates]

It depends if you forgave the rent or are still owed it.

You are meant to complete a tax return on an accountancy (rather than a cash) basis, so you pay tax on the rent you are due, not the rent you receive and use a bad debt provision for any rent owed but not received.

If, however, you agreed to receive less rent and so it was never due, you have a reduced income and are taxed accordingly.

In real life, most landlords declare the income they actually receive, using the cash basis, and never have an issue with it.

[Gordon999]

I suggest you declare whatever is received in your bank account. Its becomes a pain to declare a higher figure which you did not receive and have to pay tax on it. There are many one year rental agreements with option for tenant to leave after 6 months. There are some rentals where the tenant makes excessive noise at night and asked to vacate the flat before the end of the term.