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Landlord Entitlements...

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Dicky_morris

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Hi,

I currently have a property in my name that I am looking to rent out in the near future. I receive GYH (M) at the moment of 2 return journeys a month. As a landlord renting out the place, can I claim anything through the military like GYM...

Are there any systems in place to help with those who have to rent out properties within the military...

Thanks in Advance

Dicky
 
You might get legal fees but I cannot think for the life of me why you'd get an allowance to visit a house you now run as a business.
 
You get legal fees from the RAF and you are entitled to visit the house a few times a year funded by HMRC. It's about 40pence a mile you can claim back on your annual tax return. I think it's twice a year but I'd check that first. You only pay tax on any profit you make after paying interest on your mortgage. I like to employ tradesmen throughout the year to try and ensure I give the taxman as little as possible as it's my only house and the only reason I can't live in it is because I'm posted every 18 months.

You'll have to take into account that you'll be due capital gains tax as well if you sell it unless you live in it again for between 6 and 12 months, depending on the financial advisor you talk to.
 
ah right so it's just the legal fees for letting rather than for the purchase?


Don't suppose anyone's got a reference I can look up for the gen?
 
Joe_90 said:
You get legal fees from the RAF and you are entitled to visit the house a few times a year funded by HMRC. It's about 40pence a mile you can claim back on your annual tax return. I think it's twice a year but I'd check that first. You only pay tax on any profit you make after paying interest on your mortgage. I like to employ tradesmen throughout the year to try and ensure I give the taxman as little as possible as it's my only house and the only reason I can't live in it is because I'm posted every 18 months.

You'll have to take into account that you'll be due capital gains tax as well if you sell it unless you live in it again for between 6 and 12 months, depending on the financial advisor you talk to.
Click to expand...

Ok, the thing I cant make sense of is this.. the rental is 525 a month and the mortgage is 682 a month, when they refer to profit do they mean the amount that the tenant is putting towards paying off the mortgage each month after interest has been removed or do they mean profits made if the tenant was paying more towards the property than the mortgage payments.

Also with the 10% wear and tear etc, how does that all come into it if the rental is not meeting the mortgage, will they change my tax code to give me the money back?? does that make sense?

Cheers
 
True Blue Jack said:
You can get a refund of legal fees incurred in house letting as long as you meet all the criteria. I'm not sure, based on the information provided, that the OP will qualify.
Click to expand...

I lived in the property for four years, its just that now we have split up I have had to take on the property and buy her out so to speak...
 
Dicky_morris said:
Ok, the thing I cant make sense of is this.. the rental is 525 a month and the mortgage is 682 a month, when they refer to profit do they mean the amount that the tenant is putting towards paying off the mortgage each month after interest has been removed or do they mean profits made if the tenant was paying more towards the property than the mortgage payments.

Also with the 10% wear and tear etc, how does that all come into it if the rental is not meeting the mortgage, will they change my tax code to give me the money back?? does that make sense?

Cheers
Click to expand...

Profit is Rent minus expenses eg Mortgage interest (not the repayment part), other costs such as visiting house (40p per mile twice annually), letting agent fees, repairs, replacements (not improvements) even a certain amount each year for your own house bills for using your house as office space for your let property administration (I claim about £130 for that one).

Do a google search for Property Hawk they have some good information and the property management tool is excellent and free :PDT_Xtremez_30:
The 10% fair wear and tear is for furnished property only
 
Dicky_morris said:
Are there any systems in place to help with those who have to rent out properties within the military...
Click to expand...

You can claim the legal fees in setting up a tenancy agreement. I would strongly suggest you do it through a bona fide agent, as if it goes Pete Tonge, they will have to do the leg-work to evict your tenant. It happened to me and I basically told them to "sort it", which they did.

On the day your tenancy agreement starts, your entitlement to GYH ceases.

As others have alluded to, any visits to the property after you have rented it out are between you and the taxman - nothing to do with the RAF. However, there are lots of things you can offset - insurance, safety certificates, deterioration of carpets & curtains and mortgage interest being but a few.
 
some info

some info

The Allowances JSP has the RLE details I think. As said it is the LEGAL cost s of setting up a tenancy agreement. Some agents don't get a solicitor to check it over. I think it was about £150 when I thought about it but was going overseas and the receipts and proof the adminers needed was stupid so, didn't bother. Wish I had because then I could claim legal fees to get bad tenants evicted if needed, but had too much on at the time.

As also said tax can only be offset against the mortgage interest.
example
If rent is 525 and your mortgage is 682 but only 100 is interest (due to the low interest rates)
Then can claim tax relief against the £100
You will pay tax on £425 about £100 ish. a month. Can become a bit of a shock if you have already spent it.
 
Word of advice about property management/rental agents...


Make sure your House account is in your name, not just an accounting exercise with all the money in the agent's own big pot.

Search on "blue forces" if you want to know more. I have my parents as my letting agents (because I'd rather pay them the fee than some stranger who has no interest in looking after my house) But the house account is a joint account between us - so in the event I want/need to get at my money then i can
 
Well... It looks like I was working it out wrong..

Right...

I just spoke to a tax advisor and this is what he said..

As I am on a fixed rate I can ask the mortgage company for a break down of my annual payments and how much is capital and how much is interest.. or look at the end of year summary I get... from this then i can work it all out...So I took last years mortgage annual statement..

last year I paid 8191.20 towards my mortgage.. of that 6561.84 was interest.. therefore my "profit" was 1629.36 or thats the amount of capital I paid off my mortgage...

from that 1629.36 I can claim for the following..

The expenses you can deduct from letting income (unless it's under the Rent a Room scheme) include:
letting agent's fees
legal fees for lets of a year or less, or for renewing a lease for less than 50 years
accountant's fees
buildings and contents insurance
interest on property loans
maintenance and repairs to the property (but not improvements)
utility bills (like gas, water, electricity)
rent, ground rent, service charges
Council Tax
services you pay for, like cleaning or gardening
other direct costs of letting the property, like phone calls, stationery, advertising
Click to expand...

therefore...

525(rental) x 12(months) x 10% = 630 which is agreed wear and tear for full furnished properties only
525(rental) x 12(months) x 10% = 630 which is agency fees each month from rent

Journeys for business are @ 45p a mile therefore a single journey is £48.60 from Cheltenham to Swansea. You can have as many journeys as you want too as long as its within reason..

If the property is only part furnished you can claim for replacement items such as carpet and fitting fees or possibly new coffee table/if a dishwasher breaks.

You can also claim for the interest on any loan you had to take on to purchase the property...

The agency fees for setting up the contracts and the money for the gas certificate and the energy performance certificate

My household insurance and my landlord insurance can also come from this amount...

Gardening equipment such as the mower and strimmer I bought as well as paint for the property...

Hope this helps anyone who might end up in the same boat...
 
Dicky_morris said:
Well... It looks like I was working it out wrong..

Right...

I just spoke to a tax advisor and this is what he said..

As I am on a fixed rate I can ask the mortgage company for a break down of my annual payments and how much is capital and how much is interest.. or look at the end of year summary I get... from this then i can work it all out...So I took last years mortgage annual statement..

last year I paid 8191.20 towards my mortgage.. of that 6561.84 was interest.. therefore my "profit" was 1629.36 or thats the amount of capital I paid off my mortgage...

from that 1629.36 I can claim for the following..



therefore...

525(rental) x 12(months) x 10% = 630 which is agreed wear and tear for full furnished properties only
525(rental) x 12(months) x 10% = 630 which is agency fees each month from rent

Journeys for business are @ 45p a mile therefore a single journey is £48.60 from Cheltenham to Swansea. You can have as many journeys as you want too as long as its within reason..

If the property is only part furnished you can claim for replacement items such as carpet and fitting fees or possibly new coffee table/if a dishwasher breaks.

You can also claim for the interest on any loan you had to take on to purchase the property...

The agency fees for setting up the contracts and the money for the gas certificate and the energy performance certificate

My household insurance and my landlord insurance can also come from this amount...

Gardening equipment such as the mower and strimmer I bought as well as paint for the property...

Hope this helps anyone who might end up in the same boat...
Click to expand...

This is not my understanding of it at all. If this is true then I've been filling in my tax returns incorrectly for about 20 years.

In your case the GROSS profit ie the money you bring in through rent is £525 x 12months = £6300. To get your net profit - the taxable bit - you have to deduct acceptable expenses - one of which is Mortgage INTEREST not the capital repayment part. In your case this is £6561.84 which is more that your gross profit therefore you do not have any tax to pay.

It is still prudent to let HRMS know as when you do start turning a profit and register the tax to pay then HRMS will want a Profit/Loss statement for the whole period you have let the property as we had to this year. We let our property while I was in Cyprus. Based on the advice of the Lincoln Tax office I had all accounts in the Wifes name as she had her whole Tax allowance available to her whilst we were in Cyprus. On return and after much refurbishment of the house due to $hit agent letting to two idiot blokes (RAF Servicemen no less) we finally turned a profit and it exceeded the wifes tax allowance. Upshot was that we had provide records going back to 2003 proving there was no taxable income up until present ie no profit that exceeded the wifes tax allowance.
 
yep

yep

Big nick is right.
The tax man doesn't give a toss how much of your mortgage you paid.
You can offset costs against any income (rent) you receive.


INTEREST on loans (i.e mortgage)
Expenses ( i.e. trips to check it out, Agency fees if not taken off at source, buildings insurance, gas safety checks, decorating-while occupied/not between tenants)

Profit is Income (RENT ) - costs (see above )

As Big Nick said.
I think you will still need to fill in a Tax return and it may mean you pay less tax on other stuff or even get a rebate?
 
BigNick,

You are right, I sent my figures to him and he said exactly as you have said.. my bad!!! I misunderstood what he said originally...

Thanks again

Dicky
 
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