Live-in Landlord Tax – personal use adjustments?

Live-in Landlord Tax – personal use adjustments?

9:29 AM, 6th July 2021, About 3 months ago 3

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I am a live-in Landlord and the property is a licensed HMO. I rent out 5 bedrooms and have 1 for myself.

Does anybody have any idea how much personal use adjustments I should make for tax purposes. Last year my utilities, mortgage and repairs were around £20,000. I took off £5000, for personal use and claimed the balance against the rental income. I cannot find anything online that states how this is worked out.

Should it be done by bedrooms or square feet?

Any advice would be appreciated

Ben



Comments

by silversurfer2017

11:07 AM, 6th July 2021, About 3 months ago

Why not phone HMRC for free advice, I have always found them helpful? I would think it might fair, sensible and logical to agree with HMRC to work business expenses out on a square footage basis. If your living space is one sixth of the total of all the bedroom on a square feet basis then 16.67% is the percentage for personal use. If you had a very large bedroom, say one quarter of the total area then 25% would be appropriate. I you use the garden yourself then deduct the same percentage for personal use, however if the garden is for the exclusive use of your tenants then you could deduct 100% of the maintenance costs. Similar treatment for other property expenses.
The only meaningful comparison I could make is is the case of a holiday let where the owners use it for personal use. In that case they divide the number of weeks for personal use by the total number of weeks the property has been occupied, (either by themselves or by guests), and this is the percentage of expenses they cannot claim as a business expense. You will not of course be using a time basis but more of an amenity basis and bigger rooms obviously are more of a benefit than smaller room.

by Yvonne Francis

12:14 PM, 6th July 2021, About 3 months ago

I didn't think any private landlord (which I presume you are and not a Company) can claim for their mortgage which you have mentioned claiming. I have found the following link given by Money Savers answering the same question.

https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim2100

by silversurfer2017

16:57 PM, 6th July 2021, About 3 months ago

A licensed HMO is not a normal home and probably purchased on an interest only buy to let mortgage. I don't think you can get a residential mortgage on a HMO. The interest will be tax deductible but limited now to a maximum of 20% tax relief. Because the landlord is having some personal benefit from this mortgage then probably only on the proportion that relates to the tenanted rooms as previously mentioned.


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