Claiming UK Tax Back

[Guest taylorvillas]

Hi,

 

I have the form from the inland revenue to claim back any tax from the UK.

 

I am a but stumped on the question re any rental income, we have our house up for rent, but the rent once we get it will be the same as the mortgage payments. Do we have to show this income on the form (even though we do not have a tenant)?

 

And if we do, do we have to mention the mortgage payments as we are breaking even?

 

Thanks

 

Tracy

[Guest taylorvillas]

Bumping this as I am sure most people renting there houses must have the same issue.

[Guest drunkpunkmunkey]

I think I'm correct in saying that when you do eventually get a tenant, you can only claim tax relief on the interest part of the mortgage - not the capital repayment. But don't forget that you can also earn a tax free (personal) allowance of £7475 for the 11/12 tax year which may help offset any tax on any 'profit' above the interest repayments.

 

As for declaring zero income whilst you look for a tenant - I'm not 100% sure, but I seem to remember that if you report a loss in a given tax year, you cannot reclaim tax on a rental property BUT if you do declare it now, and in subsequent years make a profit on the rental, then you can offset some of the tax against your earlier reported loss. For the few minutes it takes to fill in a HMRC tax return, its something I would do.

 

Hope that helps a little and happy to stand corrected

[Guest taylorvillas]

Thanks, we have a repayment mortgage so assume the interest element will not apply.

 

Question I have is I have 2 mortgages, 1 in my name tenanted - I will declare this income as a gross payment (even though the profit is eaten away by the mortgage). - Assume this is ok.

 

And for the 2nd property in joint names, my partner can declare the income (when received on this house), this should be under the threshold for tax just about.

 

Does this sound fine? As if we both declare we are liable for tax twice?

 

Thanks in advance

 

A

[Guest drunkpunkmunkey]

The interest element will still apply. Regardless of whether the mortgage is repayment or interest only, the interest is decided by the outstanding balance and the interest rate. You can claim relief of the interest you pay to the bank in a given year. With a repayment mortgage, this amount will decrease slightly each year.

 

As for a joint mortgage on a second home, I would definately seek financial advise - I don't know how this works. Incidentally, within 2 years of buying a second property you have to declare to HMRC which is your 'main' residence for the purpose of capital gains tax. Beyond the 2 year grace period HMRC will decide for you.

 

As you obviously have a substantial amount invested in property I would pay for an accountant to advise.

[Pumpkin]

Thanks, we have a repayment mortgage so assume the interest element will not apply.

 

Question I have is I have 2 mortgages, 1 in my name tenanted - I will declare this income as a gross payment (even though the profit is eaten away by the mortgage). - Assume this is ok.

 

And for the 2nd property in joint names, my partner can declare the income (when received on this house), this should be under the threshold for tax just about.

 

Does this sound fine? As if we both declare we are liable for tax twice?

 

Thanks in advance

 

A

 

Repayment mortgages still have an interest element. My mortgage costs me £1k a month but I can only offset about £100 against the rental income because the rest is repayment of capital. You cannot offset your tax bill with the repayment of capital.

 

If the property is in joint names, then you should put half the income and half the expense down and your OH the other half. You cannot just decide that your OH will put it all down, you have no option in this.