UK Landlord Forum / Life

Hello,
We were letting a property until there was a major fire in March 2017. The tenants moved out that same day. The insurers paid for renovation and lost rent until the end of September 2017 when it was fit again for habitation. At that point, we decided to sell the property but it is still on the market today (07/04/2018). Obviously, we are still incurring expenses (mortgage +). For tax purposes, when would the end of letting business be deemed to end - at the end of September when the insurers stopped paying rent or when we eventually sell? If the latter, can we claim all the legal and estate agent fees as expenses too? Thanks in advance.

Has anyone an answer to this?

I can give you an answer but I've no particular expertise in the area.

I'd say you effectively ceased to "trade" in September, insofar as you not only stopped receiving an income, you also stopped seeking one. See here: https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim2510

"...For example, if the business only consisted of letting a single house, it would cease when the tenant left and the customer began to use the house as a private residence or, alternatively, when they decided the house wouldn't be re-let...."

I love the way the HMRC call us customers these days. We're customers of the HMRC in the same way that the monks of Lindisfarne were customers of the Vikings!

Also, your asking price is too high. 

I would imagine it's when you sell the 'business' the taxman does not care if you rent a property out at full market rate or if it is sat vacant with no tenants in, so the lack of rent is not a barrier.  Costs incurred go against the income so you may have a loss to carry forward.  Presume that this is set up as an individual rather than Ltd company basis so you should be able to account a loss against your personal tax liability.  Tax return that would include recent costs is a little way off yet.

Totally conflicting advice!  I was using common sense/a fair approach.  Simon is using HMRC logic.  The 2 are at complete juxture positions but I'd have to go with Simon!

Haven't read it but seen it recommended numerous times https://www.taxcafe.co.uk/property-tax-guide.html  might be worth a purchase or library request.

An interesting question ....
Could you ask an accountant and see what they say from their point of view?

Innovative use of "HMRC" and "Logic" in the same sentence there, Rip! 

I am an accountant, but unfortunately not the right sort of accountant! I have learned one thing over the years though: if you want to find something on the HMRC website ... don't search for it on the HMRC website. It has just about the worst Search facility I've seen this century (with the possible exception of Microsoft's "Help" function!)

You're much more likely to find what you're looking for by going to Google and starting your query with Gov UK. For example, I found the link above by Googling: Gov UK rental income cessation

Thank you Simon and Riptide.

The section that Simon referred to states:
"Where a rental business consists of letting property it will normally cease when the customer disposes of the last of the properties they are renting out or, alternatively, they begin to use all the properties for a non-business purpose. For example, if the business only consisted of letting a single house, it would cease when the tenant left and the customer began to use the house as a private residence or, alternatively, when they decided the house wouldn't be re-let." 

You may spot an inconsistency in this. The first sentence suggests disposal is the end point.  The second suggests the decision not to re-let is the end point. I guess I will need to have a conversation with them - wish me luck!!

Hi to anyone interested in this thread. I talked to HMRC and they said the business ends with the final payment of rent and our intention not to re-let. Case closed.

That's a bummer: I dare say when a property's only on the market for a month or two after last tenant leaves then they probably wouldn't pick it up, but six months is going to stick out a bit. In retrospect you might as well have stuck another tenant in there: hindsight is a wonderful thing!

Do you know why it's not selling? I'd have thought a recently redecorated property would do alright, unless it looks too bare without any furniture. Have you had offers you can't afford to accept?

Why not try to sell and rent at the same time but have unachievable high standards for potential tenants (and rental cost)?

That might explain some of the properties for rent on Rightmove round here.

I suppose a card in the window of a newsagent thirty miles away, with a rent of £3,000 pcm, and  a "typo" in the phone number, would do it!