Offsetting rental expense against rent income?

[simontrent]

My brother has been trying to sell his house without success. He has hatched a plan to rent his house out and then rent something closer to work.

Excluding the mortgage implications of this, can he class his rental expense as an allowance against the rental income? My head says no, but the arrangement will not increase his disposable income.

Thanks

[Eric Mc]

Of course he can. Allowable rental costs are fully allowable against gross rental income.

Of course, the landlord needs to do his homework regarding what constitutes "allowable rental costs".

[wolf1]

Eric Mc said:

Of course he can. Allowable rental costs are fully allowable against gross rental income.

Of course, the landlord needs to do his homework regarding what constitutes "allowable rental costs".

Eric I think he meant can he claim the cost of renting the new place for himself be classed as a rental expense against the income from the property he will be renting out.

[Eric Mc]

Absolutely not.

The costs of borrowing for the rented property and expenses incurred in managing and looking after the rented property are allowed.

Incidental costs (such as the cost of having to rent another property) are not.

[sumo69]

There was a case involving a famous (I cannot say) at the Tribunal a few weeks back - the point in question was whether the second property for which he had claimed a rental deduction whilst working on the London stage for 6 months was his "permanent habitual residence" or not. It was decided that home number 1 retained this quality and thus his claim for a deduction for the second was allowed whereas in your scenario the rental property would become the "permanent habitual residence" and so not a business/rental expense for tax purposes imho.

David