BTL and taxation

[lje]

By the way - if you're looking for guidence from HMRC for your tax return...

http://www.hmrc.gov.uk/worksheets/sa105-notes.pdf

[lje]

You are not liable for any capital gains tax until you sell the house which has been rented out. As has been said by others as long as you have previously lived in that house as your main home whether or not you lived in it over the last three years is irrelevant. If you rent it out for 4 years (say) and then sell it then you would look at how long you lived in it (let's say 9 years) in proportion to how long you rented it out minus the last 3 years (eg 4-3=1). In this example 10% of the profit on your house might be subject to capital gains tax. But then you have your CGT allowance and other things which would reduce it even further.

On the subject of income tax there are all kinds of allowances you can apply. Firstly, you can allow all of the interest which you have paid on your mortgage on that property against the rental income before counting it as profit. You can also allow 10% of the gross rent against furniture replacement if you rent it out furnished. There are all kinds of allowances which should mean that you end up paying not that much tax (such as costs of repairs / rental agency / gas check etc). Have a search on the HMRC web site for the details.

I rented my house out for many years whilst I lived in the US. Feel free to PM me if you have any specific questions.

[Freelancer Financials]

I think that you have two years to sell your original property from the moment you bought your second before it is liable to CGT. Check the timeframe though.

Actually it's three years not two.

You're exempt from capital gains tax for three years as long as it was your principle house of residence. CGT relief is not straight forward so best if you consult an accountant.

If you have a residential mortgage on your original home and now letting it, you need "consent to let" from the lender otherwise you're in breach of your mortgage contract. A residential mortgage means that it is for residential use only, not letting. Unless the lender agrees or provides you with consent to let.

You also need to consult an accountant regarding income tax on the rental income received. You will be pleased to know that the interest you pay on the property you rent is tax deductable along with any associated expenses.

[rsingh]

I think that you have two years to sell your original property from the moment you bought your second before it is liable to CGT. Check the timeframe though.

[Diver]

http://www.alexanderhall.co.uk/mortg...lications.html

HTH

[Pondlife]

The money you get from the rental is income and so taxable.

Phone the taxman and ask him how (s)he thinks you should account for it on you SA?

[Wilmslow]

You can designate you BTL as you primary home then sell it. It’s a bit like the three card trick or what MPs do.

Not sure I see where you are coming from - it is not a Buy to Let, but, a house I could not sell so rented. Do HMRC get info from the banks? If so, I should be in the clear as both mortgages are everyday residential mortgages...... As I was getting both sorted independantly from different banks around the same time. (Butchered the existing mortgage on house A to release into house B).

[Paddy]

Think I have dropped one.

I could not sell my house just over a year ago, so have bought the house I am in now, and renting out my old house, to long term tenants.

This was done through a Financial Advisor who set up both mortgages, and did not discuss the tax aspects around this.

Firstly, where do I stand? Is there really enough time to cobble something together between now and tomorrow?

Would it be best to take the £100 late hit and get professional advice in the meantime?

Finally, how are HMRC to know about a house getting rented – it is not a buy to let mortgage, but a mortgage where the bank are happy for this to be let, as arranged through my IFC. Mind you, when I called them about re-directing post they said they needed an approval for letting form completed first…..

In other words, has my IFC stuffed up, and what are the implications?

You can designate you BTL as you primary home then sell it. It’s a bit like the three card trick or what MPs do.

[cojak]

Only if you add mayo.

[TheFaQQer]

tell the truth as best you can and pay up when asked.

WHS.

You could always ring them, explain the situation, and see what they recommend.

There was an interesting piece in the Grauniad last weekend about how will HMRC catch me etc. and the questions that people really want them to answer - the general consensus seemed to be that if you think you will get away with it, you probably won't. As a good example, I believe that there are one or two threads about something called BN66 where people thought they would get away with paying little or no tax, and they seem to have been caught......

[DS23]

tell the truth as best you can and pay up when asked.

[Wilmslow]

Think I have dropped one.

I could not sell my house just over a year ago, so have bought the house I am in now, and renting out my old house, to long term tenants.

This was done through a Financial Advisor who set up both mortgages, and did not discuss the tax aspects around this.

Firstly, where do I stand? Is there really enough time to cobble something together between now and tomorrow?

Would it be best to take the £100 late hit and get professional advice in the meantime?

Finally, how are HMRC to know about a house getting rented – it is not a buy to let mortgage, but a mortgage where the bank are happy for this to be let, as arranged through my IFC. Mind you, when I called them about re-directing post they said they needed an approval for letting form completed first…..

In other words, has my IFC stuffed up, and what are the implications?