Aaron
Member
Registered: 9th Aug 04
Location: Cottingham, East Riding
User status: Offline
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I've rented property out for a few years now, but the last tax year was the first when i had all 4 tenanted.
In short, due to maintenance/repair, upgrades and general upkeep of the properties, my expenses for the last tax year are more than my income from all 4 properties combined.
I've completed my self assessment to reflect this, and the calculation at the end is £0 tax to pay.
To be sure that i'd done everything right i stripped off half of my expenses, and sure enough the calculation at the end gave me a tax balance.
Question is, if i submit my self assessment correctly (i.e with no tax to pay), will HMRC get shirty?
It isn't as though I have anything to hide (as i have all my receipts and invoices for the products and services), but i'm just interested.
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James
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Registered: 1st Jun 02
Location: Surrey
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Assuming all the expenses are legitimately tax deductible than I don't see how they will have any issues?
They are entitled to ask for receipts but like you said, you have nothing to hide.
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willay
Moderator
Organiser: South East, National Events
Premium Member
Registered: 10th Nov 02
Location: Roydon, Essex
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sounds shifty to me, GUILTY
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DaveyLC
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Registered: 8th Oct 08
Location: Berkshire
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This is how people play the game, hence why the rules are about to be changed.
If its expenses genuinely in relation to up-keep and maintenance than fair play, if its off-setting mortgage payments against tax then that's just naughty 
[Edited on 27-05-2016 by DaveyLC]
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luciaadr
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Registered: 11th Aug 04
Location: Bexleyheath, Greater London
User status: Offline
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As James said, a loss is a loss.
Only way you could come unstuck is if you were claiming capital expenses against your income. (new roof/extension/similar)
That would be shown as a capital deduction if you sold, rather than expense in the year.
Obviously non-interest element of loan repayments s a no-no
There's loads of guidance on HMRC website if you're worried.
[Edited on 27-05-2016 by luciaadr]
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Ian
Site Administrator
Registered: 28th Aug 99
Location: Liverpool
User status: Online
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If the expenses are legitimate then you're fine.
Guidance doc explains what you can and can't offset.
I'd also look at deferring some of it to reduce your liability next year, ideally you don't want a zero balance because it can mean that your loses are larger than they need to be. In that instance (and its not quite as simple as just not putting them down this year and including them next time) you should definitely look in to that if you want to reduce the liability going forward.
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Aaron
Member
Registered: 9th Aug 04
Location: Cottingham, East Riding
User status: Offline
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Sweet
I think the only thing on my expenses that is therefore questionable is the new windows in one of the houses. Basically, the windows in the front and rear bedroom were shite when i bought it, so i replaced with brand new frames and glass. I looked upon this as a benefit to the incoming tenant and have therefore deemed it an expense. Am i wrong to do this?
I'll download the doc for sure and have a read 
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Aaron
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Registered: 9th Aug 04
Location: Cottingham, East Riding
User status: Offline
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quote:
Originally posted by DaveyLC
If its expenses genuinely in relation to up-keep and maintenance than fair play, if its off-setting mortgage payments against tax then that's just naughty
[Edited on 27-05-2016 by DaveyLC]
Nope. None of this going on. 2 of the mortgages are interest only (therefore piss easy to work out), and i have a handy Google Sheets spreadsheet to work out interest paid on my two re-payments.
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Aaron
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Registered: 9th Aug 04
Location: Cottingham, East Riding
User status: Offline
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Good examples for anyone in the same situation as me
https://www.gov.uk/guidance/income-tax-when-you-rent-out-a-property-working-out-your-rental-income
https://www.gov.uk/guidance/income-tax-when-you-rent-out-a-property-case-studies#expenses-incurred-wholly-and-exclusively-for-the-property-rental-business
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Ian
Site Administrator
Registered: 28th Aug 99
Location: Liverpool
User status: Online
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Windows are a revenue expense if they replace old shit with modern stuff as and when sensible maintenance dictates you should do it, you want to avoid talking about improvement and benefit to the tenant as it becomes a capital improvement which isn't deductible.
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Generation
Member
Registered: 7th Jul 09
Location: Essex
User status: Offline
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I do the same, but with one property. I absolutely hate doing it, and usually try to Palm
Is off to relatives as drives in insane. I would claim for windows, and have done.
I did it for new carpets, kitchen furniture etc. When could be argued last carpet was still a carpet and served a purpose. Do everything you spend on the place
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Ian
Site Administrator
Registered: 28th Aug 99
Location: Liverpool
User status: Online
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You're basically fine unless it adds value to the property, you could argue that carpet doesn't. Kitchen perhaps but equally well that's also covered as maintenance as it wouldn't last forever.
You couldn't bang an extension or loft conversion on it for example.
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pow
Premium Member
Registered: 11th Sep 06
Location: Hazlemere, Buckinghamshire
User status: Offline
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You know your can only do the mortgage interest as an expense, not the capital coming off the balance?
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Aaron
Member
Registered: 9th Aug 04
Location: Cottingham, East Riding
User status: Offline
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quote:
Originally posted by pow
You know your can only do the mortgage interest as an expense, not the capital coming off the balance?
Yes mate. Made reference to this a few posts up.
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pow
Premium Member
Registered: 11th Sep 06
Location: Hazlemere, Buckinghamshire
User status: Offline
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Not gunna lie I was probably still pissed when I posted that!
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luciaadr
Member
Registered: 11th Aug 04
Location: Bexleyheath, Greater London
User status: Offline
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quote:
Originally posted by Aaron
quote:
Originally posted by DaveyLC
If its expenses genuinely in relation to up-keep and maintenance than fair play, if its off-setting mortgage payments against tax then that's just naughty
[Edited on 27-05-2016 by DaveyLC]
Nope. None of this going on. 2 of the mortgages are interest only (therefore piss easy to work out), and i have a handy Google Sheets spreadsheet to work out interest paid on my two re-payments.
Ask your bank for a certificate of interest for the tax year (might be able to download it from Internet banking) rather than estimate it
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