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Sam, Accountant
Category: Tax
Satisfied Customers: 14192
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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My wife bought a residential mortgaged property before the

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My wife bought a residential mortgaged property before the recession. We were forced by our jobs to move away and had no option but to rent out the property. For the last 5 years it has had a rental of ~£600 and a mortage payment of ~£1000 which means we have topped up the rent every month from our savings :(
A friend said my wife could have raised this with the tax man and paid less tax with her full time employer. Is this possible?
Thanks for your question
I assume you are declaring this rental income to HMRC and the friend may be wrong - as only the interest element of the mortgage payment is allowable (not the capital element of the payment of mortgage)
So could you advise what element of the £1000 mortgage payment is interest? (You may just have to get this figure from the annual mortgage statement.
And confirm you declare the rental income to HMRC
Customer: replied 2 years ago.

To be honest as we have always seen it as a loss she hasn't declared the income. You are right the £1000 is a repayment sum, which probably includes ~£700 interest only plus ~£300 capital elements (sorry I don't have current statements at hand). Does that mean she can claim the ~£700 interest element of the mortgage against her full time employer tax (she pays just over £1000 of tax per month)... and if so how far back can she claim? Final question I promise :) the mortgage being residential and her not living in it would be OK?

Thanks a million,


Hi Sam
Thanks for for your response
Sadly HMRC may not see it as loss as only the interest element of a loan/mortgage is the permissible part of the mortgage payment against rental income (obviously there are other allowable expenses too!)
But if your interest is £700 a month then there is a loss, but its not claimed against her employment income, its claimed against the rental income - so she declares the rental income on the self assessment tax return (which she should have registered for once the rental income began) and any other allowable expenses and if there is a loss then she can ask for the loss to be offset against future profits only. It cannot be offset against employment income unless deemed to be trade income, such as holiday lets.
She ca go back 3 full tax years (so back to 2012/2013)
So I am afraid this will not get utilised until the rental income been received exceeds the allowable expenses.
Let me know if I can be of any further assistance, but it would be appreciated if you could rate the level of service I have provided (then Just Answer credit me for my time)
Sam and other Tax Specialists are ready to help you
Customer: replied 2 years ago.

My wife and I are completely in the dark it seems can I have your details so you can become our regular accountant off this page for annual returns etc?

As much as I would love to, we are not permitted with work we engage clients with via Just Answer, to then take up work directly
I can offer two solutions
1) engage a local accountant for you OR
2) We are permitted to offer up additional services (at a time that suits you) to assist/discuss matters over the telephone (I am UK based in Kent) so when you have the information together regarding
a) rents received
b) loan interest certificates (can be requested from the bank/building society)
c) Other expenses (or I can then advise on this through the additional services
d) Your wifes pay and tax details from employment
ALL for the last 3 full years so 2012/2013, 2013/2104 and 2014/2015
I can then help you complete the forms (and where to print them of from) AND
also advise you on any potential capital gain position - as this has been more than 18 months since it was your main residence and although having to move for work purposes may apply to reduce any potential gain - I can fully advise you on this)
Let me know if you would like to have an initial chat - now or at a time that suits you tomorrow daytime/next weekend etc and I can send an additional services request( which does involve an additional charge which is an allowable expense against the rental income too!)
But I will await your agreement before sending this