Renting below market rate

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    Renting below market rate


    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)


    No they can't.
    Any posts by myself are my opinion ONLY. They should never be taken as correct or factual without confirmation from a legal professional. All information is given without prejudice or liability.


      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.
      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...


        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.
        When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
        Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).


          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.


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