Reply to: Declaring Rental Property late

[TheCyclingProgrammer]

Re: above, it does need to go on your SA if you already do one, unless you're claiming under the RAR scheme I think.

[BlasterBates]

If you're making a loss you don't have rental income.

Absolutely no problem, just go and see an accountant and get the P&L worked out over the last few years and probably you don't have a profit this year either, once you subtract the losses.

No obligation to fill in a tax return with losses, because there's no tax to pay.

Does he need to declare the property losses ? | AccountingWEB

[TheCyclingProgrammer]

hi

i am in a similar position regarding undeclared income and looking for what options are available
regards
jim

You don't say what type of income but I assume rental? Was it profitable and therefore taxable? If not, then as was stated earlier in the thread, penalties for failure to notify are geared towards the lost revenue - legally speaking you don't have to inform HMRC unless you're chargeable to tax (despite what their website might say) or already do a tax return (in which case it still needs to be declared) so if you've made no taxable profit there's no penalty they can really issue.

If you have had undeclared taxable income, then you're looking at penalties for failure to notify (a proportion of the tax owed, depending on the reason for non-disclosure and with some allowance if you fully disclose to HMRC voluntarily), unpaid tax plus interest and probably several years worth of self assessments that need to be filled out.

[jimboger1]

advice needed

How is it mortgaged?
What was the interest?
What was the rent - interest? (This is the taxable bit)
What was your income during these years?
Was it your first principal property?
Who owns it? You or joint?
What is the capital appreciation?
What was the insurance?
Does the lender know?

hi

i am in a similar position regarding undeclared income and looking for what options are available
regards
jim

[BiggieBig]

You let it furnished?



I still don't get this. You let a house out that only just covers the interest on an interest only mortgage? So your plan was to make money on the growth of the house price only (which to be fair in London is't a bad plan but still). Not paying mortgage off, not profit from rent, nothing? Is that normal in London?

Dude this is nothing to get here.
quite often espcially in London yields can be fairly low
people bank on Caipital appreciation.

As one stage people in Canary Wharf had extrememly low yields. 3% but capital was very high people were making upto 50-60 k per year.

[northernladuk]

Cool - many councils are removing any "unlet rebate period" meaning the property is due for full CC the moment your tenant leaves.

Yeah. I have been stung by that right in the middle of trying to sell my vacant flat in an area knee deep in flats for sale

[d000hg]

Cool - many councils are removing any "unlet rebate period" meaning the property is due for full CC the moment your tenant leaves.

[northernladuk]

I've a property which has barely made any profit but's that's because:
a)We had to fit a new boiler when first letting it which started us off with a deficit
b)It's been unoccupied for moderate periods between tenants
c)Tenants have not always paid

I can't recall, is council tax when the property is un-let an allowable expense for the property profit/loss?

Of course, it's an expense like anything else...

https://www.gov.uk/renting-out-a-property/paying-tax

You or your company must pay tax on the profit you make from renting out the property, after deductions for ‘allowable expenses’.

Allowable expenses are things you need to spend money on in the day-to-day running of the property, like:

letting agents’ fees
legal fees for lets of a year or less, or for renewing a lease for less than 50 years
accountants’ fees
buildings and contents insurance
interest on property loans
maintenance and repairs to the property (but not improvements)
utility bills, like gas, water and electricity
rent, ground rent, service charges
Council Tax
services you pay for, like cleaning or gardening
other direct costs of letting the property, like phone calls, stationery and advertising

[d000hg]

You have to claim that wear and tear allowance. You don't just get it and its going to be a bit late now.

Also how have you made a loss on the property? You haven't got a residential mortgage and been letting it out have you? The mortgage company will have a field day when they find out.

I've a property which has barely made any profit but's that's because:
a)We had to fit a new boiler when first letting it which started us off with a deficit
b)It's been unoccupied for moderate periods between tenants
c)Tenants have not always paid

I can't recall, is council tax when the property is un-let an allowable expense for the property profit/loss?

[northernladuk]

Due to high rents in London the wear & tear allowance can be quite high also charges from management agency have always pushed into loss.

You let it furnished?

Normally I break even on interest only BTL mortgage but with extra's above I would make a little loss each year which adds up.

I still don't get this. You let a house out that only just covers the interest on an interest only mortgage? So your plan was to make money on the growth of the house price only (which to be fair in London is't a bad plan but still). Not paying mortgage off, not profit from rent, nothing? Is that normal in London?

[BiggieBig]

How come the property has all of a sudden become profitable??

Due to high rents in London the wear & tear allowance can be quite high also charges from management agency have always pushed into loss.

Normally I break even on interest only BTL mortgage but with extra's above I would make a little loss each year which adds up.

i'm now in profit because I have been on fixed rate BTL deals and now i've reverted to a variable rate which is extremely low.

hopefully that answers most people questions.

Still no concrete solutions

I've asked my accountant (btw i'm happy to pay for the advice from a professional) to see what they advice.

[NCOTBAC]

How come the property has all of a sudden become profitable??

[MarillionFan]

How is it mortgaged?
What was the interest?
What was the rent - interest? (This is the taxable bit)
What was your income during these years?
Was it your first principal property?
Who owns it? You or joint?
What is the capital appreciation?
What was the insurance?
Does the lender know?

[eek]

You have to claim that wear and tear allowance. You don't just get it and its going to be a bit late now.

Also how have you made a loss on the property? You haven't got a residential mortgage and been letting it out have you? The mortgage company will have a field day when they find out.

[northernladuk]

I know less than nothing so someone can correct me, but I thought a fine could not exceed tax owed which sounds like zero.

Unfortunately after a dig about it appears you are right. There is talk about other penalties for deliberate concealment of income (even if it made a loss it is still income) but no specific figures.

It does also mention that they will take a lot more interest in your affairs once deliberate concealment is found which doesn't sound that scary but for a contractor I can imagine it is something to be avoided at all costs.