Rent expense on second property (but owned by me)

**Clare@InTouch** · 11 May 2011, 15:59

Originally posted by chrisl View Post

I have been asked a question which i wonder if anyone can help.

This person rents a flat near his place of work and stays there during the week specifically to enable him to be near his work. His main residence he returns to at the weekend.
Therefore, he claims home office rent costs for 5/7th of the rent.

Now he actually owns another property (which he currently rents out) near where he is currently renting his second property for work.
If he moved into his second owned property, could he still make a claim?
I assume technically he would have to pay himself rent, claim it as an expense and then record the rent he is receiving as taxable income (which could effectively be nil if he has a large mortgage and i suppose the rent will kind of be invisable)

Is this a posibility?

He can rent the property to the company, but as you say he'd then have to declare the rental income on his tax return. The rental income would be reduced by mortgage interest, but not by the full mortgage repayments themselves so it's possible he'd have a rental profit. If that's the case then it's pretty much in one hand and out the other as far as tax goes.

**northernladuk** · 11 May 2011, 17:45

Originally posted by Clare@InTouch View Post

He can rent the property to the company, but as you say he'd then have to declare the rental income on his tax return. The rental income would be reduced by mortgage interest, but not by the full mortgage repayments themselves so it's possible he'd have a rental profit. If that's the case then it's pretty much in one hand and out the other as far as tax goes.

I would assume the fact this is a second property that will already be claiming rental income so just continues as he does. I assume that the above assumption is incorrect and he is working under the radar like 99% of people renting second homes do and not claiming it.

My comment on this, as always, errs on the side of caution. If you are going to do this, although it is quite in your rights to do it, it is very tempting to take the piss. Greed will overcome sense in most people and they wills start doing stupid things that will bite them in the end.

If you are going to do this you are going to have to be stupidly clean and right about it. Someone renting their own flat out to their company looks like a dead cert for abuse and probably normally is. He will have to declare it to the HMRC and pay his dues, make sure all purchases for the property are in keeping with a rented property and the rent he charges in market price.

There are a number of MP's out of work and even in jail for doing abusing this so tread carefully.

Rent expense on second property (but owned by me)