Offsetting rental losses

[Bobby Rae]

Good evening everyone

I have just evicted a tenant who did not pay rent. Therefore i have a number of months of non payment, as well as the various fees such as solicitors.
Does anyone know if i can use these losses to offset against my income with regards to the amount of tax I pay? Or is it the case that i can only offset it against future rental income?

Many thanks in advance

Bobby

[Tax Accountant]

I have already posted the reply in the other section where you also posted the query. The short answer is that rental losses can only be relieved by carrying it forward and setting off against the next available rental profits.
Ramnik

[Yardleystar]

Income is divided in to categories called schedules that have their own rules for calculating tax.

Rental income is schedule A and income from an occupation, whether salaried or self-employed is schedule D

Although in most circumstances you can offset losses in one occupation against profits in another, you cannot offset schedule a income against earned income.

These losses are carried forward to offset the first available rental profits - and there is no real reason why you cannot carry these losses forward indefinitely even if you do not currently receive rent or own rental property.

[Tax Accountant]

Income is divided in to categories called schedules that have their own rules for calculating tax.

Rental income is schedule A and income from an occupation, whether salaried or self-employed is schedule D

Although in most circumstances you can offset losses in one occupation against profits in another, you cannot offset schedule a income against earned income.

These losses are carried forward to offset the first available rental profits - and there is no real reason why you cannot carry these losses forward indefinitely even if you do not currently receive rent or own rental property.

As I said before: ''The short answer is that rental losses can only be relieved by carrying it forward and setting off against the next available rental profits.''

Ramnik

[Grange]

there is no real reason why you cannot carry these losses forward indefinitely even if you do not currently receive rent or own rental property.

Really? Your Schedule A losses cease when your letting business ceases. If you don't let anything for a couple of years, then the Inland Revenue will try to argue that your letting business has ceased. See one of the IR leaflets on Schedule A.

There is of course no statutory authority for the contents of the IR leaflets. However, if the losses are substantial you would be well advised to get hold of a small property and rent that on. Even renting and sub-letting a garage would be enough to maintain your losses.