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bigduckontax
bigduckontax, Accountant
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I had 2 properties 6 months from apr 2015 till dec

Customer Question

I had 2 properties for about 6 months from apr 2015 till dec 2015 and both of them rented out and I lived at rental property for some reason.
first question, should li have to declare the net rental income in this coming tex return?
2nd question, I sold one property out last dec 2015 which means I have only one property and I am living at a rental property right now, in this case the rental income is taxable?
Submitted: 9 months ago.
Category: Tax
Expert:  bigduckontax replied 9 months ago.
Hello, I am Keith, one of the experts on Just Answer, and pleased to ba able to help you with your question. This rental income should be declared on your 15/16 self assessment tax return. You should also mention the disposal as Capital Gains Tax (CGT) would apply, but for the last 18 months of ownership you are deemed to be in residence even if this is not the case and Private Residence Relief (PRR) is extended to cover this period. PRR relives CGT at 100%. Your last question causes me some confusion. Are you living in the remaining property or elsewhere and if the latter is it still rented out? If it is still rented of course the rental income must be declared. I do hope that I have been able to shed some light on your position.
Customer: replied 9 months ago.
Thanks for your quick answer, I would like to take some more information from you regarding this matter. Here is some more details...
I rented the first property out around Nov 2014 while I lived at rental property to save the living cost. at this time I was unemployed and no income. so I did not do any tax return for 14/15 tax year.
And I got a job on Apr 2015 and I bought 2nd home on May 2015 and moved to my 2nd home until Dec 2015. I sold the 2nd home without any capital gain due to my new job in different city (Bath).
For my understanding, you said that I have to declare the rental income on 15/16 tax year even I am living a rental property, is that right?
FYI, here is my calculation , my rental house cost me 950/month and the rental net income is around 1000 {rental income 1350/month - (maintenance cost:270 + mortgage cost 67)}, I don't understand why I have to pay tax because i don't have any benefit from my current property. I agree I had a real rental income for a short time period when I lived at my 2nd property which was from May 15 until Nov 15.Please advise me of how much rental tax would be in any case.
Expert:  bigduckontax replied 9 months ago.
You should have declared the rental income you received in the tax year 14/15. If this did not exceed your personal allowance then you will have no Income Tax liability, but you must still make your peace with HMRC. You should advise HMRC of the sale even if there is no gain by means of a note in the other information box of the tax return. If you made a loss then this can be carried forward indefinitely to offset future gains. If you occupied the second house as your sole of main domestic residence then PRR will apply and there will be no CGT to pay. I may have misinterpreted your question but you must declare any rental income for each and every year that it is earned. I regret that you are still causing confusion by your constant reference to living in a rental property. This is, for tax purposes, irrelevant. It is houses you own but do not occupy and rent out which attract Income Tax (IT). You do receive benefit from your current monthly rentals 1350 - 270 - mortgage interest element only. What you pay to rent another house to live in does not come into the tax equation at all. Without detail of the interest element of the mortgage and your income from your job I cannot calculate your IT liability; I do not have enough data.

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