Buy to let property

At the moment we rent out an apartment on a buy to let mortgage. We have not declared the rent as we make a significant loss on it. What are the penalties with regard to this.
We also have a private residence and I'm wondering if we sold the 2 properties in order to purchase a different residence what would the tax implications?

Help I really need to convince my partner to declare this and sort it out.

351suzanne said:

At the moment we rent out an apartment on a buy to let mortgage. We have not declared the rent as we make a significant loss on it.

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as far as im aware (and i'm sure someone will clarify) if your making a loss there is nothing to declare

not to go off topic but this begs the question, why buy to let if the rent is not covering the mortgage particularly with capital appreciation slowing/falling?

[Edited by DrMoriarty to fix link. That thread is closed. Please keep this one on-topic.]

You are only making a loss if your interest payments + expenses are greater than your rent.

If you have a repayment mortgage you might still be liable for tax and in my opinon the sooner you declare it and get yourself sorted with the revenue the better. Might be no harm to hire an accountant to review your rent and check if your liable or not.

I think in the next few years they will be having a good look for any owners of second houses to see if they were receiving rent or not.

Peadar

The fact that your rental income is less than the mortgage doesn't mean you don't have to declare it. You are paying for a property you've bought, after all! See this [broken link removed].

[Edit: Post crossed with Peadar's.]

DrMoriarty said:

The fact that your rental income is less than the mortgage doesn't mean you don't have to declare it. You are paying for a property you've bought, after all! See this [broken link removed].

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Agree with other posters, you have to make a return whether running at a loss or not. On the plus side the loss can be carried forward and can be offset against any future profit on the property.

Correction: Meant to say 'any future profit on rental income with regard to the property.

You should make the return and being able to carry the losses forward indefinitely, will allow you at some stage when you make a profit to use it. I submitted my tax return yesterday for the first year including rental income and again I posted a loss, so it make no difference to my tax return

Thanks Guys. Now to persuade himself

apart from being prosecuted for not filing a return for the rental income, you will also face prosecution for not registering with the PRTB

tosullivan said:

apart from being prosecuted for not filing a return for the rental income, you will also face prosecution for not registering with the PRTB

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That's true - but I could wish the PRTB made things easier. You can't register just a key tenant or tenants, you have to take details from each individual tenant (including their PPSNs - I don't know why they even want those, since PRTB has no function in relation to the rent relief for tenants in the tax system), and if you have several adult tenants chances are that one or two are the key tenants and others are more transient; you have to have the tenants physically sign it, which means you can't just submit details and pay online; and if you make anything the PRTB deem an error (even if it's just that they didn't understand your return - perhaps a couple of minors, for whom you don't need to give details, but who you include as numbers because after all children are people too!), they send it back to you to be done again.

I have very little time for landlords who actively refuse to register, but a cardinal rule for separating people from "their" money is that you should make it easy for them! The PRTB registration set up is all stick (albeit not yet a very forceful stick), and no carrot. I'd love to see a system where the landlord can just take the tenants names as recorded on the lease - key tenants only, any other dispute to be resolved between themselves, but total number of tenants recorded - and submit details online with option to pay either by DD authorisation, or by credit card. That, with a one off amnesty of about a month for current delinquent landlords, and a promise of a serious enforcement campaign as soon as the amnesty finishes, would probably send registrations soaring.

351suzanne said:

At the moment we rent out an apartment on a buy to let mortgage. We have not declared the rent as we make a significant loss on it. What are the penalties with regard to this.

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Did you pay the investor stamp duty rate when you purchased the apartment ?