My parents passed away and I inherited their home, I was an only child. It has been designated bye the Local Council as a second residence for Council Tax Purposes. I have now rented this property out. I am trying to find out what form or forms would I need to use for taxes. The Foreign Tax Office is luckily in Cardiff, where my home is. I do not think this is a use tax liability. I will have paying taxes as a UK subject to our lot. Would someone have any info on this. Thanks
We rented out our house in the UK while we were in the US. I don't think it is the same situation as yours because I think it was still our primary residence. However, as to taxes....
For Council Tax, your tenants pay this. When the house is unoccupied, you assume responsibility. In our situation, had the house been empty for 6 months, there would have been no tax to pay, and after that 50%.
For income tax, you use the standard UK tax return form, which you should be able to see on the IR website. Basically, you pay tax on your profit, which in your case, should be quite a bit since you aren't paying mortgage interest. You deduct agency fees, any insurance that you pay, maintenance costs, etc. from your income, and pay tax on the rest.
We didn't make any profit on our house rental, and we knew we wouldn't, so we filled out an Inland Revenue form at the beginning that gave our agent permission to pay us the rent minus his fees gross. Without this form, he would have sent something like 40% directly to the Revenue. I can't remember how it works if you don't use an agent (I think the tenants are supposed to send it) - but when you are a foreign landlord, the Inland Revenue definitely wants their share before any of it reaches you. You then have to claim back any overpaid taxes (which you will have because of your personal allowance).
I read up on this about 5 years ago, but I do remember that the information was fairly easy to find on the Inland Revenue website. They have a section for foreign landlords.
You have to declare all this on your US tax return as well, but you get to deduct foreign taxes paid.
Thank you for the info. I did go to the site. I can file for an exemption. As I am in the dual taxation category. The renters put rent in my account. No taxes. I file taxes over here, which would be easier. The letting agency also charged me VAT which I do not have to pay. So filed for info on that. Thank you again.