How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask Sam Your Own Question
Sam, Accountant
Category: Tax
Satisfied Customers: 14155
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
Type Your Tax Question Here...
Sam is online now

I inherited a house from my Mother in 2013. The property was

This answer was rated:

I inherited a house from my Mother in 2013. The property was up for sale for over a year up to February 2014 and was first rented out at £550 in February 2014 I had paid £1300 in council tax readjustment and electricity and insurance so I made a loss in 2014/15 for the two months it was rented.
(Due to the property needing repair which involved replacing a leaky disabled bath and rotting kitchen I actually spent in total about £10000 before I let it.)
I had been under the impression that I would let inland revenue know about the income at the end of the tax year when I knew what I had spent on the property in repairs and if it had been rented out for the full year as the current contract is for 6 months and there is insurance and estate agency fees. I now have conflicting advice and wonder if I should make them aware of the income now? Are you able to advise me please?
Thanks for your question.
You should have alerted HMRC as soon as the letting began as then they are aware that there is this income to take into account and that you will need (if you do not complete one already) a self assessment tax return.
I should also advise that costs to get the property into a position to let are not allowable against the rental income and only any costs that were prior to let, that relate to capital improvements 0 such a new bathroom (entirely) or such like are then allowable against any capital gains rising when the property is sold.
The insurance is an allowable expense as is the managing agent fees (estate agent fees are not allowable unless this was connected to the letting side of matters) also the costs to get keys cut are an allowable cost, advertising etc and once you have tenants in situ, then any repairs and travel to the property to carry out any repairs.
The council tax readjustment does not appear to have anything to do with the tenants - so is unlikely to be allowable, but do let me know if tis was connected to the tenants and how this was so.
AS the letting began in Fen 2014 you should have completed a 2014 self assessment which was due into HMRC no later than 31/01/2015 so I am afraid you will incur a penalty for the late tax return.
Let me know if I can be of any further assistance
Sam and other Tax Specialists are ready to help you