rental income from home in UK taxable or not?

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ninak

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I am about to move home from the U.K.where I have been living for the last 3 years. I have a house there which I have managed to rent out privately. The rent does not cover the mortgage, there is a £ 250 monthly shortfall. What is my position with regards to tax on the rental income. I may have to go back to the U.K. within the next year as I have only a 3 month contract in Ireland at the moment though the plan is to renew and stay here. As there is no profit I am not sure what the situation is.
 
If you stay in Ireland as you plan to do, you will be domiciled in Ireland and will be an Irish tax resident.

You will be liable to pay tax in Ireland on all your worldwide income.

You will also be liable to make a tax return in the UK for your UK income.

You subtract the tax paid in the UK on your property income from you irish tax liability on the UK property.


But because you are not making any profit on the rental of you property, you will not be liable for tax.

Tax is payable on Profits, and you are making a loss !
 
Thanks for that. I knew I probably would not be liable for much tax, but just have to figure out how to do it all legitimately with regards to making tax returns in both countries.
 
LouisCribben said:
But because you are not making any profit on the rental of you property, you will not be liable for tax.

Tax is payable on Profits, and you are making a loss !
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This is not necessarily the case. If the property was in Ireland, the fact that the rent doesn't cover the mortgage payments doesn't matter. The property owner can offset mortgage interest against rental income (subject to conditions - a search here will show up numerous threads on what can be offset) but if the rental income is greater than the interest portion of the mortgage, then tax is payable on that remainder, regardless of whether the rent covers the entire mortgage (interest + principal).

I can't comment on the UK rules or offsetting UK tax against Irish tax but the above is just an example of a case if OP owned and rented out a property here in Ireland.

Sprite
 
WaterSprite said:
This is not necessarily the case. If the property was in Ireland, the fact that the rent doesn't cover the mortgage payments doesn't matter. The property owner can offset mortgage interest against rental income (subject to conditions - a search here will show up numerous threads on what can be offset) but if the rental income is greater than the interest portion of the mortgage, then tax is payable on that remainder, regardless of whether the rent covers the entire mortgage (interest + principal).

I can't comment on the UK rules or offsetting UK tax against Irish tax but the above is just an example of a case if OP owned and rented out a property here in Ireland.

Sprite
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You are right Sprite, but he did say his mortgage exceeds the rental by 250 a month.
This makes it unlikely that he is making a profit, although not impossible.
He didn't say how much of the mortgage is interest, so we don't know.
 
Hi, yes sorry, should have stated that the interest is greater than the rent received so no profit.
 
Contact the Non-Resident Lanlord Scheme, Fitzroy House, Castle Meadow Road, p.O Box 46, Nottingham, N62 1BD. Don't have the phone number to hand but you can find it through the U.K Revenue web-site. They will advise you.
I would be surprised if you have to fill out a tax return in the U.K when you have spoken to them and filled out the necessary forms.
You then declare any loss to the Revenue here for the year in question.
 
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As a non-resident UK landlord you will have to register to receive UK rental income gross and make an annual tax return with the IR in the UK. This can be done on-line. Register at www.hmrc.gov.uk.
See Non-Resident Landlord section. If you've no other UK income and are making a loss on this investment you will not be liable for tax in the UK.

What is not clear to me is whether you will have a tax liability on this additional worldwide income (irrespective of whether a loss is being made or not) in Ireland. Would suggest you obtain independent tax advice on this.
 
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