Thursday 20th May 2021
Do you have rental income from a house you own? Did you know that you need to declare it to the ‘tax man’?
If you own a property but are living in military accommodation and renting out the house you bought, there are a few things you should know.
For instance, you bought a house, then got posted too far away to make it a reasonable commute so renting out that house seems logical.
Did you know you have to declare rental income to the HMRC?
If your rental income is more than £1000 per year, you need to declare it. You can check on GOV.UK if this means you.
If you have been blissfully unaware of this until now and have been receiving income for a year or more, there is an amnesty scheme you can use.
Let Property Campaign
The ‘Let Property Campaign’ allows you to tell HMRC about your rental income and only pay a small fine (equating around 10-15% of the tax owing as opposed to the 100% owing if they find you by themselves).
What happens should you decide to sell your property?
Capital Gains Tax implications
The good news is your military house falls under the ‘Job Related Accommodation’ (JRA) rule – meaning you don’t have to pay capital gains tax (CGT) on your privately owned property if you decide to sell it.
This rule exists because often Service personnel would really like to live in their own house but can’t because they are required elsewhere by the military. To do this, you need to write to HMRC to tell them that the house is your ‘primary residence’ for tax purposes (this will make it easier later on if you sell it as HMRC will already have a record of the situation).
This only applies to ONE privately owned property! If you decide to buy more properties to rent out, then the JRA rule would not apply to the additional properties and you will be liable to pay CGT on them when you sell.
The JRA rule also covers your spouse – even if they are non-military, so they will not have to pay any CGT on their share of a co-owned property.
Information on self-assessments for landlords
There is a lot of helpful information on the HMRC website about self-assessment for landlords. It’s fairly straightforward to complete yourself – unless you have an aversion to numbers in which case there are lots of friendly accountants who can help.
Article provided by Money Bee
This information is fairly broad and applicable to most people – but may not be applicable to you. If you want to double check, or have any other questions please email [email protected]