Rental income

PGM

Quick question...

I'm now using an agent to rent out a house. On their statement they net off any repairs, checks, their fee's.

Should I add all those costs back to show a true income? Or just show the income as what I actually receive?

Many thanks

T.C.

You need to add them back to show true income and then use them as expenses against that income to get the profit. Make sense?

PGM

Thanks TC, I had a feeling that was the correct way, the harder way usually is!

A friend was telling me he does his based on cash received, although I saw the warning signs when he thought I wouldn't get tax relief on costs I've paid directly... There must be a lot of people wrongly completing SA's based on net income received from their agent.

T.C.

Yes, agreed. In most circumstances it probably doesn't make any difference to tax, but that is the correct way.

JodieR

If it's a furnished property & you're claiming the W&T allowance you definately want the gross rents in the income box or you'll be diddling yourself out of W&T allowance!

Saltpot

Hi There. If the property is registered to more than one person remember that the income has to be split over each owner evenly. This can seem be a bit unfair if you have a situation where the two owners say husband and wife have different incomes and thus may be in different tax bands. I always do a simple income and expenditure account to show the actual costs and keep all receipts as evidence.

PGM

Thanks all, I should be sorted now. I've done rental income before, but never through a rental agent so just wanted to double check how to treat the statements.

On a side note, another person is using the tax code adjustment for low rental income profits, and avoiding having to do a self assessment. I think it was JodieR that highlighted those rules a while back.

reader

Saltpot wrote: »

Hi There. If the property is registered to more than one person remember that the income has to be split over each owner evenly.

Not necessarily, an election can be made by the owners of the property to their respective tax offices for a different division of profits and losses (therefore occasionally the share of the profits or losses will be different from the share in the property) (HMRC, PIM1030).