Tax misconceptions about letting out a property
Do you let out a property? If so, you may not be aware that there are a number of misconceptions when it comes to taxpayers declaring rental earning to HMRC. These are the situations when you will need to declare rental earnings to HMRC:
- If you inherit a property and let it out.
- If you buy a property as an investment and let it out.
- If you and your partner are divorcing, and you decide to let out your jointly owned property, you will need to declare your share of any rental profits on your individual tax returns.
- If you move to a new house, as a result of your employment, and let out the house you are moving from.
- If you move into a care home and let out your present home to help pay for the fees.
- If you buy a property for your son or daughter to use while at university, and they sub-let to friends on an informal basis to defray costs, any surplus monies received from this sort of arrangement will need to be declared.
- If you move to tied accommodation and you keep your existing home and let it out. If the rents you receive only cover your mortgage repayments (capital and interest) you may consider that you have not made a profit. However, the capital part of your mortgage repayments are not an allowable deduction for income tax purposes.
In addition, you need to be aware about recent changes in the rules for repairs and finance costs (interest) that we have covered in recent issues.
If you are concerned that you may be required to declare your rental income, and you have not yet done so, we can help. There is a tried and tested process to bring matters up-to-date