Home / rental property

PGM

If you live in a house and rent part of it out, is it a simple process of apportioning mortgage interest etc by that ratio?

ie home owner and 2 sets of lodgers - limit allowable costs by 2/3

thank you

T.C.

Have you looked to see if the rent-a-room scheme applies?

PGM

T.C. wrote: »

Have you looked to see if the rent-a-room scheme applies?

Thanks TC, I believe that solves the problem! You can earn £4,250 per year, and best of all you don't need to fill any forms in. Seems too good to be true

I have another question about my own, I renovated it, lived in it a couple of years (still completing bits), then rented it out. I'm now wondering if I can put any of the renovation costs through as revenue costs?

Fingersan

Hi

I don't think you could successfully claim the renovation costs as an expense, particularly if you renovated the house and then moved in yourself. You should, however, be able to claim it against CGT, assuming that you will have a gain after residential lettings relief etc.

Regards

PGM

Fingersan wrote: »

Hi

I don't think you could successfully claim the renovation costs as an expense, particularly if you renovated the house and then moved in yourself. You should, however, be able to claim it against CGT, assuming that you will have a gain after residential lettings relief etc.

Regards

Are you sure, they are revenue costs, not capital costs?

The bit that worried me was about living in it before renting, I need to find the rules. But the problem I have, doing 20k of renovations has obviously hit profits, but the mortgage is also low because it was a cheap buy, so making a high monthly profit because of this, and not offsetting the costs against it.

Fingersan

Hi PGM

Below is a link to a property guide from the ICAEW tax faculty. Page 10 relates to repairs / improvements etc.

http://www.icaew.com/~/media/Files/Technical/Tax/Tax%20news/TAXline%20tax%20practice/taxline-tax-practice-27.pdf

Regards

PGM

Fingersan wrote: »

Hi

I don't think you could successfully claim the renovation costs as an expense, particularly if you renovated the house and then moved in yourself. You should, however, be able to claim it against CGT, assuming that you will have a gain after residential lettings relief etc.

Regards

What you say seems totally true after reading the link, and thank you for that.

The downside is, it puts me in a fairly rubbish tax position.

ie, buying a 80k house, and spending 20k on repairs, means my tax deductible cost is the mortgage on the purchase (80k x 70%) - (and the 20k repair cost of no use until sale of house as a capital cost)

If I'd bought the house from say a builder that did the 20k of repairs before sale, I'd have a tax deductible costs of 100k x 70%.