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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 4191
Experience:  FCCA FCMA CGMA ACIS
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I had some rental income couple of years from renting

Customer Question

I had some rental income for a couple of years from renting my primary residence, as I had to relocate to a different county with job. During that time I had to rent a place, which was more expensive than the rental income I received. I have now eventually sold my property. During the rental period, I filled in my tax return on line.
I am now faced with an income tax bill. Can I offset the income received against my rents?
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.

Hello, I am Keith, one of the experts on Just Answer, and happy to help you with your question.

You are liable for tax on your UK rental income. However, you may make the following deductions [source, Which]:

'The most common types of expenses you can deduct are:

  • water rates, council tax, gas and electricity
  • maintenance and repairs to the property (but not improvements)
  • contents insurance
  • interest on a mortgage to buy the property
  • costs of services, including the wages of gardeners and cleaners (as part of the rental agreement)
  • letting agents' fees
  • legal fees for lets of a year or less, or for renewing a lease of less than 50 years
  • accountant’s fees
  • rents, ground rents and service charges
  • direct costs such as phone calls, stationery and advertising for new tenants

The expense should be incurred wholly and exclusively as a result of renting out your property.'

You cannot offset property rental losses against other income and vice versa..

That is as far as I can go at present. Perhaps you could elaborate further on your statement 'Can I offset the income received against my rents?' Rents add to your income, not reduce same.

I do hope that I have been of some assistance.

Customer: replied 2 years ago.

Many thanks for your response. During the two years I rented out my property and the rent I paid out as a tenant, I incurred a net loss of over £2000. Now I am having to pay HMRC a tax bill of over £1000. This is my issue.

When you say I can deduct the rates, do you mean the rates I am paying as a tenant?

Expert:  bigduckontax replied 2 years ago.

No, the deductions of rates refers to council tax or its equivalent which might be business rates, sorry.

The rent you paid out as a tenant whilst you worked overses is not a tax deductible item. Should you try to claim it HMRC will, not unreasonably, retort that everybody has to live somewhere!

I am so sorry to have to rain on your parade. Benjamin Franklin once famously quipped that in life there are but two certainties, death and taxes. I regret that here is a classic example of his dictum.

Please be so kind as to rate me before you leave the Just Abswer site.

Customer: replied 2 years ago.

Just to clarify, I was not working overseas; I was working in Cheshire and my primary residence was in Northampton.

Does the argument still hold?

Expert:  bigduckontax replied 2 years ago.
Deep apologies I misread county as country. However, as my old boss was wont rto say 'It doesn't alter the price of cheese.' The rent you paid out is not tax deductible, unless, of course, it was paid to you by your employer as part of your emoluments and did not exceed a two year time frame..
bigduckontax and other Tax Specialists are ready to help you
Expert:  bigduckontax replied 2 years ago.
Thank you for your support.