It is never a surprise to me how so many people become landlords of a rental property. Let me give you an example….
You owned a house and moved in with your girlfriend/boyfriend and so rather than selling your house you decided to rent it out…..
You haven’t let anyone, including HMRC know, because you don’t make any money as the rent just covers the mortgage…. Unfortunately it is only the interest element of the mortgage that qualifies as a deduction before paying tax.
4 years later HMRC ask you why you haven’t declared any income because they find out from Land Registry you have 2 properties. This is not unusual and usually leads to years of tax assessments that are massively increased by penalties for not informing them and not filing a return.
Not only that but significant responsibilities fall onto landlords such as:-
- keep your rented properties safe and free from health hazards
- make sure all gas and electrical equipment is safely installed and maintained
- provide an Energy Performance Certificate for the property
- protect your tenant’s deposit in a government-approved scheme
- check your tenant has the right to rent your property if it’s in England
- give your tenant a copy of the How to Rent checklist when they start renting from you
- fit and test smoke alarms and carbon monoxide alarms
- follow fire safety regulations for property in a purpose-built block of flats or for houses and property adapted into flats
If you have a mortgage on the property you rent out, you must get permission from your mortgage lender.
What a minefield!
Moral of the story…… make sure as soon as this happens you talk to us. We can guide you through the financial requirements and ensure that you do not get any unwanted tax surprises years down the line.
Mark Torr – Director