More Landlord Tax Questions
Discussion
Afternoon gentlemen.
I am currently serving in the forces and I have a house (formerly our home) in Hampshire which I own with my wife. I was posted to North Devon in February and we decided to move into married quarters at the start of April. The house has been rented out since then but due to the distance we use a fully managed letting service. I am pretty confident I am doing everything properly and legally. I do however have a few queries:
- I have read (or misread?) that I would be able to claim tax deductions for the cost of any office equipment (PC, desk, office chair etc), phonecalls and other small costs related to letting the property. As stated we do use a letting agent but could we claim due to the distance between our married quarters and our house?
- Likewise can we claim deductions for petrol used to travel to visit the property? If so how many visits per year?
- When we purchased the house I paid 26% of the deposit with the wife paying the remainder and since then we paid the mortgage equally. She has been out of work since the move so is it possible to split the profit in proportion to the amount we have paid thus reducing the tax we pay as a couple?
- We have a life insurance policy from BUPA which covers both of us for the value of the remaining mortgage at the time of death. It was a condition from our lender that we had life insurance for the mortgage so is the insurance premium also deductable?
- Our central heating boiler had to be replaced in order for us to obtain a Gas Safe certificate before the house could be let. British Gas said it was safe to be used with us living there but failed the criteria for letting the house. Yes, you've guessed it, is the cost of this replacement item (ie. not and improvement) also deductable?
I plan on speaking to the legal expert who visits camp on a "first session is free" basis this week, but the questions are playing on my mind.
Thanks for reading and thank you in advance for any replies.
Dai
I am currently serving in the forces and I have a house (formerly our home) in Hampshire which I own with my wife. I was posted to North Devon in February and we decided to move into married quarters at the start of April. The house has been rented out since then but due to the distance we use a fully managed letting service. I am pretty confident I am doing everything properly and legally. I do however have a few queries:
- I have read (or misread?) that I would be able to claim tax deductions for the cost of any office equipment (PC, desk, office chair etc), phonecalls and other small costs related to letting the property. As stated we do use a letting agent but could we claim due to the distance between our married quarters and our house?
- Likewise can we claim deductions for petrol used to travel to visit the property? If so how many visits per year?
- When we purchased the house I paid 26% of the deposit with the wife paying the remainder and since then we paid the mortgage equally. She has been out of work since the move so is it possible to split the profit in proportion to the amount we have paid thus reducing the tax we pay as a couple?
- We have a life insurance policy from BUPA which covers both of us for the value of the remaining mortgage at the time of death. It was a condition from our lender that we had life insurance for the mortgage so is the insurance premium also deductable?
- Our central heating boiler had to be replaced in order for us to obtain a Gas Safe certificate before the house could be let. British Gas said it was safe to be used with us living there but failed the criteria for letting the house. Yes, you've guessed it, is the cost of this replacement item (ie. not and improvement) also deductable?
I plan on speaking to the legal expert who visits camp on a "first session is free" basis this week, but the questions are playing on my mind.
Thanks for reading and thank you in advance for any replies.
Dai
Is the house in joint names?
You can offset costs incurred by the landlord (i.e. you) in managing and maintaining the property. That includes travel costs to and from the property or travel incurred when performing any activity related to the managing the property.
The easiest option is to use the 45p per mile rate as the basis of teh motor and travel claim as it saves the bother of having to keep actual petrol vouchers etc.
You can also offset repairs and maintenance costs, insurance etc paid by the landlord.
And you can offset the mortgage interest (if there is any).
Is the house fully furnished?
You can offset costs incurred by the landlord (i.e. you) in managing and maintaining the property. That includes travel costs to and from the property or travel incurred when performing any activity related to the managing the property.
The easiest option is to use the 45p per mile rate as the basis of teh motor and travel claim as it saves the bother of having to keep actual petrol vouchers etc.
You can also offset repairs and maintenance costs, insurance etc paid by the landlord.
And you can offset the mortgage interest (if there is any).
Is the house fully furnished?
As eric says, you can claim anything in relation to the managing the property.
You can also claim for the interest portion of your mortgage.
If jou jointly own the property then you can split the profits and spread the tax liability.
Also, in your situation I would suggest that your wife deals with anything to do with the property, and submits an invoice for her time, further shifting the tax liability to her.
You can't claim for the boiler if it was needed to bring the house up to standard. I'm surprised they say it was suitable for occupation by you, but not a tenant, its the same safety check regardless as far as I'm aware.
I'm a BTL landlord myself, not an accountant, so anything eric says trumps me
You can also claim for the interest portion of your mortgage.
If jou jointly own the property then you can split the profits and spread the tax liability.
Also, in your situation I would suggest that your wife deals with anything to do with the property, and submits an invoice for her time, further shifting the tax liability to her.
You can't claim for the boiler if it was needed to bring the house up to standard. I'm surprised they say it was suitable for occupation by you, but not a tenant, its the same safety check regardless as far as I'm aware.
I'm a BTL landlord myself, not an accountant, so anything eric says trumps me
As the property is in joint names, then the correct way to return the rental income is to split the income and declare it separately in separate Self Assessment tax returns.
So you both should have contacted HMRC to register to submit Self Assessment tax returns.
I presume you need to submit tax returns for tax year 2011/12? If you do, as the "paper" submission deadline has now passed, you will need to file teh rerturns on-line. The filing deadline for the on-line 2011/12 return is 31 January 2013.
You cannot file on-line without having -
a Self Assessment Unique Tax Reference (UTR)
the various codes and passwords needed to access the HMRC website on-line filing section
I presume you already have your own UTR. Your wife will need to get one as quickly as she can (if she doesn't have one at the moment).
And if neither of you have submitted on-line before, you will also need to get moving regarding filing codes etc. HMRC can take a number of weeks to get these various serial numbers, codes etc sent out to the taxpayer.
Whatever you do, don't leave everything to January. If you start the process that late, it is most likely that you won't have all the necessary codes sent to you in time to allow the returns to be filed by the end of January.
So you both should have contacted HMRC to register to submit Self Assessment tax returns.
I presume you need to submit tax returns for tax year 2011/12? If you do, as the "paper" submission deadline has now passed, you will need to file teh rerturns on-line. The filing deadline for the on-line 2011/12 return is 31 January 2013.
You cannot file on-line without having -
a Self Assessment Unique Tax Reference (UTR)
the various codes and passwords needed to access the HMRC website on-line filing section
I presume you already have your own UTR. Your wife will need to get one as quickly as she can (if she doesn't have one at the moment).
And if neither of you have submitted on-line before, you will also need to get moving regarding filing codes etc. HMRC can take a number of weeks to get these various serial numbers, codes etc sent out to the taxpayer.
Whatever you do, don't leave everything to January. If you start the process that late, it is most likely that you won't have all the necessary codes sent to you in time to allow the returns to be filed by the end of January.
Codes for registering are coming through very quickly at the mo - I had those for a new client within 7 days of registering them last week.
Re the OP's queries, I will comment:
- you can charge a non- taxable admin fee in lieu of all personal costs of typically £150 per annum is typical for my clients.
- similarly you can charge 45p per mile for visits to the property if required which is tax-free for the claimant.
- the life insurance is a personal expense and not tax deductible.
- the boiler as installed prior to the commencement of the letting business is not deductible BUT is a cost you can claim when considering any CGT on any eventual sale of the property.
- of the property is owned jointly then HMRC will expect you to split the profits equally.
Hope that helps.
David
Re the OP's queries, I will comment:
- you can charge a non- taxable admin fee in lieu of all personal costs of typically £150 per annum is typical for my clients.
- similarly you can charge 45p per mile for visits to the property if required which is tax-free for the claimant.
- the life insurance is a personal expense and not tax deductible.
- the boiler as installed prior to the commencement of the letting business is not deductible BUT is a cost you can claim when considering any CGT on any eventual sale of the property.
- of the property is owned jointly then HMRC will expect you to split the profits equally.
Hope that helps.
David
Edited by sumo69 on Saturday 3rd November 10:19
dai1983 said:
due to the distance we use a fully managed letting service
dai1983 said:
Likewise can we claim deductions for petrol used to travel to visit the property? If so how many visits per year?
You can't have it both ways. If you have a fully managed service then why are you visiting the property so often?Edited by Sir Bagalot on Saturday 3rd November 12:46
We have already registered for self assesment and have UTR for both of us. We started letting on 05/04/12 so we would have to fill in the self assesment for 12/13?
We plan on visiting the property about twice a year to check up on it so its helpfull if we can claim the cost of this travel. Does the £150 admin costs also still apply ebven if we have a letting agent?
Thanks again guys for the replies,
Dai
We plan on visiting the property about twice a year to check up on it so its helpfull if we can claim the cost of this travel. Does the £150 admin costs also still apply ebven if we have a letting agent?
Thanks again guys for the replies,
Dai
5 April 2012 was the very last day of tax year 2011/12 - so you COULD have an obligation to submit a tax return for 2011/12
But I doubt it really.
It does seem that the first year you will need to submit returns is 2012/13. HMRC will contact you both just after 5 April 2013 reminding you that you will each need to submit a return.
They don't send out actual paper forms any more - unless you specifically ask them to. If you are completing a paper return for 2012/13, the filing deadline for submiting the return is 31 October 2013.
If you are submitting the return on-line, the filing deadline date is 31 January 2014.
Any self assessment Income Tax arising for 2012/13 is due and payable by 31 January 2014.
But I doubt it really.
It does seem that the first year you will need to submit returns is 2012/13. HMRC will contact you both just after 5 April 2013 reminding you that you will each need to submit a return.
They don't send out actual paper forms any more - unless you specifically ask them to. If you are completing a paper return for 2012/13, the filing deadline for submiting the return is 31 October 2013.
If you are submitting the return on-line, the filing deadline date is 31 January 2014.
Any self assessment Income Tax arising for 2012/13 is due and payable by 31 January 2014.
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