Rental Income

[bootilicious]

Can someone just point me in the right direction?

I have inherited a property and have decided to rent it out.

I am aware that I will be required to pay tax on any income received from renting the property.

Can someone advise me on what records I need to keep (I am assuming rents received and costs associated with renting the property)? What are the allowable rental expenses for tax purposes?

Am I right to believe it taxed under schedule D? (UK tax schedule)

Thanks for help and replies.

Booti

bump. My title is not interesting (Perhaps should have alluded to bumsex in the title)

I can help a little, you need to keep records of all income and any related expenses, things like elec, insurance, water, council tax-unless these are paid by the tenant? If you use an accountant then their costs can be deducted, assuming you only use them because of the property. Mileage if you go to the property (eg for doing maintenance) and costs of maintenance/repairs, if it's a furnished let costs of any new appliances etc. Re-decorating costs. Any management fees if you are using an agent to let it out.

Basically any costs that are incurred because of the rental property.

Thanks Eddas what you have said it very helpful. Do you (or anyone else) know, is the income taxable under schedule D? I will know that I have located the right information on the HMRC website.

Lots of things are allowable as expenses. But only from the day the lease is signed. Advertising the property, maintaining it, insurance, interest on the mortgage payments (but not the mortgage itself).

The things you can't claim for are things like capital expenses, so things which increase the value of the property such as putting in new windows, radiators, getting the roof retiled etc. Also any items you purchase that aren't necessarily fixed to that property. So a tv or fridge which you could buy and only stick in there for a week before swaping it for your manky one at home isn't claimable.

You can claim a wear and tear allowance of 10% on the rental income instead of claiming specific maintenance things if you let your property furnished. Doing that doesn't stop you claiming other things like the insurance, ground rent etc.

Are you going to use an agency to rent it out? If so their costs are allowable expenses.

You should give your tenant(s) receipts for any rent they pay, and you should keep proper invoices for any expenses you claim in case HMRC ever ask you to justify the expenses.

And yes you'll have to pay tax on any income you make. Any losses can be carried forward and offset against following year(s) rental income.

search2.hmrc.gov.uk/kbroker/hmrc/forms/viewform.jsp?formId=3061

Does this help ? It is declared as part of a self assessment return.

If you don't already complete a tax return you will probably need too unless the income is minimal.
You will need to complete this form to register for Self Assessment
www.hmrc.gov.uk/sa/forms/sa1.pdf

Thank you so much. This info has pointed me in the right direction.

I usually fill out a self assessment, so will include this income in the 2010/11 one.

Thanks again.

MNers rock

You can claim for new windows as long as they are a direct and similar replacement so plastic for plastic but no plastic to wooden.

After doing my first tax return, I now keep a spreadsheet and everymonth add into it the figures I need, that will hopefully save hours of trawling back through bank statements....
Also there is is a small difference if it's furnished or not (10% wear and tear allowance vs something else but I claim the 10% so can't remember sorry)
Finally if you (or OH) are a higher rate tax payer, sometimes it can make sense to have the property in your (or his) name to minimise tax.
HTH

I think you should be looking at schedule A?

Thanks again everyone.

Will have a look at Schedule A thinkingaboutschools

And will set up a spreadsheet too