If you let a property below the market rate (as opposed to providing it rent-free), you may deduct the expenses of that property up to the amount of rent received.
If you’re claiming the 10 per cent Wear and Tear Allowance, the relief is added to the other expenditure on the property and again it can therefore only be deducted up to the amount of the rents received.
As a result, in either situation uncommercial lettings should not produce a loss for tax purposes. Any excess expenses cannot be set against profits from another rental property or carried forward to be used in a later year.
If you would like to discuss this further, please feel free to contact us to be put in touch with your local TaxAssist Accountants office.
By Jo Nockels
Disclaimer: The information provided is based on current guidance (at date of publication) from HMRC and may be subject to change. Any advice shared here is intended to inform rather than advise. Taxpayer's circumstances do vary and if you feel that the information provided is beneficial it is important that you contact us before implementation. If you take, or do not take action as a result of reading this information, before receiving our written endorsement, we will accept no responsibility for any financial loss incurred.