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Property losses- do I need a tax return?

I have a Buy to Let property, but because of the size of the mortgage, I do not make any profit from it. I am employed and have never submitted a tax return before- do I need to now?

Although you have no income to tax from your property, you would probably benefit from documenting the losses by submitting a tax return. Having a clear record of the losses will allow you to carry forward the losses and offset them against future profits you make from the property.

Please note, you are obliged to submit a tax return if your gross rents (i.e. the income from the property before deducting any expenses) are over £10,000 per annum or if your profits are over £2,500 per annum (i.e. after expenses have been deducted). This is irrespective of whether the property is profitable or not.

Unfortunately, you cannot offset rental losses against other income. If you had any other rental properties, they may be regarded as one rental ‘business activity’ and therefore this loss would automatically be offset against the profits of the other rental properties.

Property losses may only be offset against future profits from the same rental business activity. If you purchase another rental property later on, you may not be able to offset the loss against these profits if there is a large gap between when you owned each of the properties.

If you would like some assistance in registering with HMRC and completing your tax return, please feel free to get in touch with your local TaxAssist Accountant.


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