Can landlords roll over losses for tax purposes?

Can landlords roll over losses for tax purposes?

13:51 PM, 15th March 2013, About 11 years ago 9

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Can landlords roll over losses for tax purposesRowan Ferguson needs some advice on whether landlords can roll over losses for tax purposes. Her “Readers Questions” article follows:-

“I Purchased a buy-to-let in October 2012, have incurred £5,00 on expenses, the bulk of which was for necessary repairs and maintenance which has taken 5 months.

From reading the HMRC guidelines I deem these to be repairs and maintenance as opposed to capital improvement so will claim on my tax statement.

The property has been unoccupied during this time.

I have just found my first tenant whose lease starts on 6 April 2013.

Can I carry forward those expenses into the new financial year (2013-14 tax year), as during the current tax year I have not collected any income but have incurred expenses?” 

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14:23 PM, 15th March 2013, About 11 years ago

Yes you can claim all your expenses against your income as long as they can be classed as repairs or mainenance. Your tax return will automatically show you making a loss. (if you do it online). You can carry forward your losses year after year until such time that you are in profit.

17:39 PM, 15th March 2013, About 11 years ago

On a similar theme....In early 2010 I bought a property in need of repairs as a rental investment. The property needed roof repairs, replacement windows, replacement kitchens, re-wiring, decorating etc. , all in all quite a lot of work. At the time I understood that the costs incurred were capital expenditure as I'd just bought the property rather than repairs and as such couldn't be offset against rental income. Now I'm not so sure!

This raises 2 questions: Firstly, can the costs of the repairs be set off against rental income (I think I'm now convinced they can be but I'm open to contradiction!) and secondly, as the costs were incurred over tax years 2009/10 and 2010/11 am I too late or can I offset them against this years rental income?



Alex Williams

18:14 PM, 15th March 2013, About 11 years ago

Repairs and so on required to get the property fit to let in the first place and without which you would be unable to let the property are capital.

Repairs that are done before your first tenant but which are not necessary in order to achieve a rental can be offset against income.

It is often better to get a property let in whatever state first to prove that any subsequent expenses are most likely to be offset against income.

You can amend a tax return as far as I understand up to 12 months after submission so you could go back 12 months are move stuff wrongly allocated against your capital account in that period. Otherwise I think you are stuffed.

Mark Alexander - Founder of Property118

18:22 PM, 15th March 2013, About 11 years ago

My accountant deals with my tax affairs and I continue to use them on the basis that they save me far more than they charge me every year. I am certain that rental losses can be rolled forward indefinitely so long as your accounting is sufficiently robust to stand up to an HMRC inspection. If you are having to ask these questions may I respectfully suggest that you should be talking to a specialist accountant who understands landlord tax and deals with a lot of landlords. If you would like an introduction to mine please see >>>


20:10 PM, 16th March 2013, About 11 years ago

Carl Bayley publishes various taxation books for landlord. They will deal with all the above including if expenditure is pretrading expenditure or deductable repairs and maintenance for a trading business.

Richard Kent

22:32 PM, 17th March 2013, About 11 years ago

@Rowan Ferguson

Yes, I you have 'generated' a net Loss on your property rather than a net Profit it must be entered into your tax return for the year in question, to then be carried forward to the next tax year.

If you make a profit on your property income in the next tax year your loss can be set off against it.

Loss in year 1 (£5000)
Profit in year 2 £8000
Therefore profit in Year 2 minus loss used from Year 1 = £3000 Profit.

Richard Kent

22:43 PM, 17th March 2013, About 11 years ago

@Rowan Ferguson

For your reference please look at the SA100 supplementary form SA105 here:

You will see boxes 14, 16 and 17 are relevant and specific to your questions.

Richard Kent

23:08 PM, 17th March 2013, About 11 years ago

@Rowan Ferguson

A bit more help for you.

You can submit your 2012/13 Tax returns in early April at the earliest and as late at 31st January 2014.

At the time you submit your 2012/13 accounts you can account for the loss on this property which you purchased in October 2012.

When you come to submitting your accounts for 2013/14 you can then use that loss if you wish or if you need to.

Please see the SA105 as I said earlier as this will clarify things a little for you.

You have plenty of time but as you have guessed, you really do need to see an accountant.

Self Assessment accounts are quite straight forward but can be tricky if you've not been trained in accountancy.

7:20 AM, 18th March 2013, About 11 years ago

Thank you everyone for your response, these have been very helpful.

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