Mortgage interest exceeds rental income

[funkygoddess]

HI!

I am really confused about all this tax stuff! I have just started renting out my house (July). Do I have to pay tax? The rental income doesn't even cover the interest on my mortgage so can I deduct this as an allowable expense?
Also do I have to let the Inland Revenue know or wait for them to contact me? I am soooooooo confused. Will someone who is not half as dim as me please reply!

Thanks! From one stressed out landlord (with really annoying tentants by the way)

Funkygoddess!! :confused:

[dazalock]

Contact your Tax office and tell them that you need to complete a Self Assessment Tax return. When you get it you should see the section for Property income and the headings will allow you to show what you make and what you loose. Interest payments are allowable against Tax as are some other expenses like Agency fees and the cost of raising AST's and the like. You are also allowed (if your property is furnished) a 10% allowance for wear and tear. In essence the return is not complicated, the trick is claiming for the right things.......... have you considered using an accountant?

[Tax Accountant]

Tell your tax office that you wish to register for self-assessment because you have rental income from July 2005.

The tax return wil not be issued until immediately after the end of the tax year on 5th April 2006.

You will need to ensure that the tax office have sent you the 'Income from Property' pages to attach to your core tax return. You will need to complete the core tax return as well as the income from property page.

If your allowable expenses exceed the rental income, you will have a loss which you will be allowed to carry forward and use against the rental profits of later years.

Ramnik