Self Employed but now also renting out house...

[BikingScot]

Hi folks

This forum's been extremely helpful in the past and hope you can help again.

I'm sorting out my wife's accounts and need some advice. She's a self employed physiotherapist so using the self employed accounts which is straight forward. In addition we began renting out our home last year so I'm wondering how to account for this income. As the rent goes in and the mortgage comes out of her account should I include this within her self employed accounts, or do I need to prepare separate accounts? I'm assuming I put them all in together...

In which case - is the mortgage now an allowable expense? From November until April when our interest rate dropped we were making a loss on it (Rent of £575 didn't cover mortgage of £649). Can these losses be used to reduce her tax liability?

The property was available to rent from start of September but no tenants moved in until 1st November, so we had two months of paying the mortage with no rental income. Can I include these mortgage payments as expenses in her yearly accounts to reduce her overall tax bill?

One last thing. The mortgage is in both our names, but as I'm back to being a full time student, she pays the mortgage and all the rent goes into her account. I presume I only need to enter details on her tax return or do I need to include it in my self assessment too?

Many thanks

[antonycc]

Hello,

As the physiotherapy business is a separate business I would keep that in a completely separate set of accounts. If you complete multiple suplements to the Self Assessement forms you'll be taxed personally on your total drawings after other personal taxation considerations.

Take a look at this posting where a similar DIY Accounting user has a business selling greeting cards and also rents out a static caravan: http://forums.teneric.co.uk/diy-acco...ent-18117.html

"Lord Hutton" is one of our most prolific posters and he give some advice relevent to your query in the pensultimate post as well as links for further reading.

Thanks,

Antony.

[Lord Hutton]

BikingScot, you do not say if you are renting out "all" of your property or just a couple of rooms - it is essential to understand this as there are different tax treatments i.e "rent a room". Take a look at this link: http://www.direct.gov.uk/en/MoneyTax...ome/DG_4017814

There are lots of additional links in this topic for you to investigate to see exactly what allowance you can claim to offset against the income. Remember also as a landlord there are a host of other legal and safety issue you need to concern yourself with - not least attention to any gas and electrical appliances and their regular maintenance and inspection!!
In any event you need to treat your rental activities as a separate business from Mrs Physo's as they are unrelated.
Note: The interest on your mortgage or other property loan is allowable as an expense, not the repayment of the principal loan amount. So if you are repaying £650 pm, perhaps only £50 of this is interest repayments, so that's what you can claim as an expense.