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| Are
you renting a property? You may need to do a tax return. |
Renting one or more properties
is treated by the Inland Revenue as a business for tax purposes.
If you rent more then one property you can offset losses from one
against another. We answer some common questions about being and
landlord and completing a tax return on your rental income:
- What
are residential lettings?
- Do
I need to compelete a tax return if I rent a property?
- How
much tax will I pay on my rental property?
- What
expenses are allowable for renting a property?
- How
long do I need to keep my expense information for?
What are residential lettings?
Any property you rent out for other people to live in is classified
as a 'residential letting'. There is a difference for tax purposes
between 'residential lettings' and holiday lettings.
If you rent a room in
your house this could also be classified as residential lettings,
but you can take advantage of the Inland Revenue's 'Rent-a-room'
scheme, which allows you to recieve up to £4,250 tax free.
Do
I need to complete a tax return if I rent a property?
If you make over £2,500 a year from your rental property,
you will need to complete a tax return. If you total income for
your property is over £15,000 in the tax year you must declare
it on the land and property pages of your Self Assessment tax return.
How much tax will I pay on my rental
property?
Any expenses that you incur when renting your property
will be taken off the income you recieve from it. The remainder
is profit and this will be added to your other income and taxed
at your tax rate.
What
expenses are allowable for renting a property?
If you have any residential lettings you can reduce your tax liability
by offsetting any allowable expenses against your rental income.
These expesnes could include:
- letting agent's,
and lawyers/legal fees
- building and contents
insurance
- mortgage/loan interest
for your property
- maintenance and repairs
-improvement costs are not allowed
- rent, ground rent
and property service charges
- Council Tax
- advertising your
property to rent
- other costs, such
as phone calls
How long do I need to keep my expense
information for?
You need to keep any records relating to your rental property for
6 years, whether you completed a tax return or not.
Disclaimer: The above information can not be taken
as advice and is for illustration purposes only. Please call Tax
Fix before making any claims or confirmation. Tax Fix can not accept
any liability for action taken and any losses incurred.
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