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  • Tax

    Accidental Landlords & HMRC and S24 pain

    I had a call from an old School friend who knew I was a Landlord and wanted some advice ??

    The situation is he owns a house which was a family home but needed to move for a new Job

    He could not sell the house So he got permission from his Lender to rent the property and permissions was granted  a number of years ago

    The property has been rented since ?

    My friend never got around to informing HMRC  But a letter arrived from HMRC to his home asking if he was a Landlord

    I met with him today and advised that he needs to come clean with HMRC and declare the income

    He also knew nothing about S24 which will impact his Tax Affairs

    My question has to be what percentage of our sector is in this position

    After the impact of S24 he will make No Profit so he has decided  to sell

    He asked me why was he caught ??

    I think it was because he was  using a Managing Agent who have informed HMRC

    It is good to see HMRC doing its job

    Has anyone else had this experience what are the penalties HMRC can impose on this sort of thing

    DL

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    Learn Change and Adapt ?????

    Hi DL,

    Letting Agents are obliged to report all their customers (landlords) to HMRC.

    I suspect that is what happened here.

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    Penalty likely to be 70% of Tax due as Hmrc would deem it deliberate but not concealed

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    Thanks Sean hope you are well

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    Learn Change and Adapt ?????

    Ouch, that will eat int the profits from the sale - Don't suppose the Tax penalty is CGT deductable, no perhaps not, only a thought ;-)

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    spot on And I think its a great thing too

    You and I both pay tax so why not them?

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    Learn Change and Adapt ?????


    I may soon be in a similar position. As far as I was aware there is no mortgage interest relief on a domestic mortgage, tax is payable on rental income minus expenses. Have I misunderstood this? Does S24 give relief on domestic mortgages?

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    Reintroduce full mortgage interest relief and drop the 3% stamp duty surcharge

    PLEASE sign Petition Here


    If you let a previous residence with a mortgage then the tax treatment is the same as if it was a BTL mortgage for the period it is let.

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    Thanks EssexLL, this Accidental Landlord option is looking better all the time. As a BRT I anticipated paying 20% tax on rental income if I couldn't sell but it seems this could be lower than 5%. I'll speak to an accountant!

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    Reintroduce full mortgage interest relief and drop the 3% stamp duty surcharge

    PLEASE sign Petition Here