BTL and taxation

[Wilmslow]

Think I have dropped one.

I could not sell my house just over a year ago, so have bought the house I am in now, and renting out my old house, to long term tenants.

This was done through a Financial Advisor who set up both mortgages, and did not discuss the tax aspects around this.

Firstly, where do I stand? Is there really enough time to cobble something together between now and tomorrow?

Would it be best to take the £100 late hit and get professional advice in the meantime?

Finally, how are HMRC to know about a house getting rented – it is not a buy to let mortgage, but a mortgage where the bank are happy for this to be let, as arranged through my IFC. Mind you, when I called them about re-directing post they said they needed an approval for letting form completed first…..

In other words, has my IFC stuffed up, and what are the implications?

[DS23]

tell the truth as best you can and pay up when asked.

[TheFaQQer]

tell the truth as best you can and pay up when asked.

WHS.

You could always ring them, explain the situation, and see what they recommend.

There was an interesting piece in the Grauniad last weekend about how will HMRC catch me etc. and the questions that people really want them to answer - the general consensus seemed to be that if you think you will get away with it, you probably won't. As a good example, I believe that there are one or two threads about something called BN66 where people thought they would get away with paying little or no tax, and they seem to have been caught......

[cojak]

Only if you add mayo.

[Paddy]

Think I have dropped one.

I could not sell my house just over a year ago, so have bought the house I am in now, and renting out my old house, to long term tenants.

This was done through a Financial Advisor who set up both mortgages, and did not discuss the tax aspects around this.

Firstly, where do I stand? Is there really enough time to cobble something together between now and tomorrow?

Would it be best to take the £100 late hit and get professional advice in the meantime?

Finally, how are HMRC to know about a house getting rented – it is not a buy to let mortgage, but a mortgage where the bank are happy for this to be let, as arranged through my IFC. Mind you, when I called them about re-directing post they said they needed an approval for letting form completed first…..

In other words, has my IFC stuffed up, and what are the implications?

You can designate you BTL as you primary home then sell it. It’s a bit like the three card trick or what MPs do.

[Wilmslow]

You can designate you BTL as you primary home then sell it. It’s a bit like the three card trick or what MPs do.

Not sure I see where you are coming from - it is not a Buy to Let, but, a house I could not sell so rented. Do HMRC get info from the banks? If so, I should be in the clear as both mortgages are everyday residential mortgages...... As I was getting both sorted independantly from different banks around the same time. (Butchered the existing mortgage on house A to release into house B).

[Pondlife]

The money you get from the rental is income and so taxable.

Phone the taxman and ask him how (s)he thinks you should account for it on you SA?

[Diver]

http://www.alexanderhall.co.uk/mortg...lications.html

HTH

[rsingh]

I think that you have two years to sell your original property from the moment you bought your second before it is liable to CGT. Check the timeframe though.

[Freelancer Financials]

I think that you have two years to sell your original property from the moment you bought your second before it is liable to CGT. Check the timeframe though.

Actually it's three years not two.

You're exempt from capital gains tax for three years as long as it was your principle house of residence. CGT relief is not straight forward so best if you consult an accountant.

If you have a residential mortgage on your original home and now letting it, you need "consent to let" from the lender otherwise you're in breach of your mortgage contract. A residential mortgage means that it is for residential use only, not letting. Unless the lender agrees or provides you with consent to let.

You also need to consult an accountant regarding income tax on the rental income received. You will be pleased to know that the interest you pay on the property you rent is tax deductable along with any associated expenses.