Rental income tax and expenses when selling

Sheepnosleep · 05-09-2018 01:49PM #1

Hi I’m looking for some advice please.
Last year we were trying to trade up our house as our family size grew. We ended up in a situation that we went sale agreed on a bigger house but due to negative equity we couldn’t sell our first home, therefore we because accidental landlords and had to rent out our first house.

So 18 months on we have thankfully just sold our 2 bed house after renting for 18months, we completed a tax return last year and were shocked at home much tax we had to pay so I’m trying to see if there are any additional expenses I can claim this year before I submit a final tax return on the rental income.

My 2 questions:
- Can I claim the estate agent fees for selling the house as an expense?
- We made a loss from the original purchase price so is this considered a capital loss and can this loss be offset against any rental income tax due this year?

Calahonda52 · 05-09-2018 05:51PM

No and No against your rental income calculations
Add fees to the capital loss
Capital loss will stay with you, it is not lost.

In passing what shocked you about having to pay tax on the rental income: did you deduct all the allowable expenses?

Sheepnosleep · 08-09-2018 01:56PM

Calahonda52 wrote: »

No and No against your rental income calculations
Add fees to the capital loss
Capital loss will stay with you, it is not lost.

In passing what shocked you about having to pay tax on the rental income: did you deduct all the allowable expenses?

Thanks Calahonda52 for your response.

It’s listed that agent agents fees can be an expensive so wasn’t sure if that was just for renting or could be for selling too.

What shocked me was more about the amount of tax we had to pay, over 7k and we used an accountant after the first year to make sure we did it right so they advised us on what expenses to claim.

So can a capital loss only be offset when selling a future capital asset? Is there a time limit on this capital loss?
Thanks again I’m clueless in this area and seems to be so many things that are grey areas in relation to expenses for hat can be claimed

Peregrinus · 10-09-2018 06:04AM

Sheepnosleep wrote: »

Thanks Calahonda52 for your response.

It’s listed that agent agents fees can be an expensive so wasn’t sure if that was just for renting or could be for selling too.

No. Just the expenses associated with earning rental income from the property. So if you used an agent to market the property to prospective tenants, to negotiate the lease for you, to collect the rent for you, that kind of thing, then the agent's fees for doing that would would be deductible against the rental income.

Sheepnosleep wrote: »

So can a capital loss only be offset when selling a future capital asset? Is there a time limit on this capital loss?

Nope. You can carry it forward indefinitely.

nompere · 10-09-2018 09:12AM

Sheepnosleep wrote: »

So can a capital loss only be offset when selling a future capital asset? Is there a time limit on this capital loss?
Thanks again I’m clueless in this area and seems to be so many things that are grey areas in relation to expenses for hat can be claimed

It's only a proportion of the capital loss that can be carried forward. If you owned it for 10 years and let it for 2 of those years, then 2/10 of the loss can be carried forward. The remainder relates to the period when the property was a private residence, and isn't a loss for CGT purposes.

Rental income tax and expenses when selling

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