Rented flat and Tax

[carron81]

Hi

Just asking a question on behalf of my mum

Her and her partner bought a flat as an investment either for them to live in when they downsize/retire or to sell for retierement money.

They're renting out the flat but not at a profit so they don't have to pay tax. They just wanted to cover the mortgage.

Now the interest rates have come down they're now making a small profit and wondering if they have to declare it.

She's thinking about investing the extra money back into the flat and putting instulation in and a new bathroom window.

Shes not wanting to get into bother with the taxman but now there making profit she's worrying she will and wants to know whats best to do

The flat is in Scotland so not sure if the law is different here

[Ethel]

All income has to be declared, whether it makes a profit or not.

[queby]

We have rented out property for several years. As already mentioned, all income should be declared. Your mother can offset many things against the rent, i.e. mortgage interest (note, you can only offset the interest portion of your payment!), outgoings such as insurance, repairs, etc. If it's furnished she can offset 10% of the rent (after water rates) against wear and tear, or the actual cost of replacements. Being honest with the taxman is not as frightening as some people think. Look on the Inland Revenue website, there's loads of info there.