Tax clawback on property

[flowstone]

Hi

I have some questions on tax payments.

We have moved into a new house 12 months ago and stated that we are owner occupiers. I already own a house which I bought as FTB in Sept 2002. I also had some rooms rented out there to help pay for the mortgage. When we moved to the new propoerty in Dec 2006, I let 2 of the tenents remain in the old house while I arranged to put it on the market and recieved rental income from them. I did not switch the TRS to the new property although the mortages for my portion of the new property and the full portion of the old property are more or less the same.

In my mind I am now due to pay the revenue for the following:

Stamp duty for previous property (at one stage I recieved more than the limit for the rent a room scheme maximum, is this the point that I owe stamp duty from or from when it ceased to be my principal residence

Do you cease to be eligable for TRS once you recieve more than this rental limt (Circa7,600 pa)for your rooms? Will I need to pay this back?

Will I have to pay tax on the incremental difference in amount received above 7,600 PA or the whole income?

Is capital gains tax on the sale of the house calculated pro rata from Dec 2005 or from when I crossed the rental threashold?

Am I likely to be hit with significant penalties if I approach the revenue on this?

Anyone any ideas on the the best way to get this resolved. I have got some cash through a work bonus and need to get this sorted. Can anyone recommend a good tax advisor / accountant and what should I expect to pay for their services?

Cheers

FS

 

[bwdbwd]

Hi FS

have in the last couple of days found my self in the nightmare world of "clawback" - both my girlfriend and I own a property - she is a FTB of 2 years - the plan was to move into my house and rent hers but thats going to hit us with a clawback amount of 14,000 - seems horrendous for two people who just want to settle down together - can't figure any way out of it either ( except move into her house and rent mine, but that's another story ).

As for your query, as far as I know you pay income tax on all the rent once you've broken the limit. As for CGT, sell the house, say nothing about the tenents who stayed for an extra few months and there should be no CGT as it was your main residence

bwd

 

[Satanta]

Hi

I have some questions on tax payments.

We have moved into a new house 12 months ago and stated that we are owner occupiers. I already own a house which I bought as FTB in Sept 2002. I also had some rooms rented out there to help pay for the mortgage. When we moved to the new propoerty in Dec 2006, I let 2 of the tenents remain in the old house while I arranged to put it on the market and recieved rental income from them. I did not switch the TRS to the new property although the mortages for my portion of the new property and the full portion of the old property are more or less the same.

In my mind I am now due to pay the revenue for the following:

Stamp duty for previous property (at one stage I recieved more than the limit for the rent a room scheme maximum, is this the point that I owe stamp duty from or from when it ceased to be my principal residence
SD is owed or it's not. No dates come into it. You pay the clawback at investor levels at the date you bought, for the price you bought [exclusive of vat]

Do you cease to be eligable for TRS once you recieve more than this rental limt (Circa7,600 pa)for your rooms? Will I need to pay this back?I don't see why this effects your TRS? It means you must pay Income Tax on the full amount of rent recieved but shouldn't impact TRS. Moving out of your property and it not being your PPR means TRS is no longer available.

Will I have to pay tax on the incremental difference in amount received above 7,600 PA or the whole income?Sadly the whole income AFAIK

Is capital gains tax on the sale of the house calculated pro rata from Dec 2005 or from when I crossed the rental threashold?CGT is calculated differently to SD. CGT is calculated as "Period as PPR + (final??) 12 months of ownership grace period / Total Ownership". Lots of threads on AAM on this which go into far more detail.

Am I likely to be hit with significant penalties if I approach the revenue on this?Best to seek independant advice before approaching them. Accountant or tax expert.

Anyone any ideas on the the best way to get this resolved. I have got some cash through a work bonus and need to get this sorted. Can anyone recommend a good tax advisor / accountant and what should I expect to pay for their services?As above. Can't suggest any names though.