Any rental losses made on a property can be carried forward into the next financial year.

Sometimes you will incur a rental loss on your property investment. Rental losses can be incurred intentionally or unintentionally. The important point to note is that any losses can be carried forward into the next year and can be used to reduce your tax liability for that year.

Case Study: After three years of owning his two-bedroom buy-to-let property, John decides to replace the bathroom suite. The cost of replacing it with a like-for-like replacement is £2,500.

His rental income for the property is £4,800 annually, but after all his annual expenses are deducted, e.g., offsetting interest payments, the cost of the replacement bathroom suite, etc., he is left with a £1,000 rental loss.

This loss can be carried forward and offset against his rental income the following year.

This entry was posted on Wednesday, September 24th, 2008 at 1:50 pm and is filed under Property Companies, Property Income Tax. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.