advice on Income tax

[zachary]

I lived in a property for many years and due to circumstance bought another home with my new partner. I have since remortgaged my original property and changed the mortgage into both our names. I have rented out my original property for about 14 months, it is now empty and for sale. I was told by a friend that I only needed to declare any profit on the home I rented out. As I wasn't making any profit I didn't declare. I now think that is not the case.

Questions:
Should I have declared the remortgage amount to the Inland revenue and the subsequent rent?

If so how do I now declare it? Am I looking at a lot of money to be repaid? Would I have to pay any outstanding amounts immediately?.

I would appreciate any help
Thanks,
zachary

[jonathan]

If your property was first rented after 6th April 2004 you are still within the timescale for submitting a tax return with details of the rental property to the Inland Revenue. You have until 31st January 2006 to do so. If you rented the property prior to April 2004, you are late and could be subject to penalties. If this is the case either see an accountant or approach the revenue and tell them you made a mistake.

What you need to declare is the profit (or loss). You will need to work this out (or ask an accountant to do it for you). The profit is the income you received less allowable expenses. From the brief information you give, it looks likely that the remortgage is not relevant, so you may have made a profit.

Without seeing actual figures it is impossible to give you any idea of the amount of tax/penalties which may apply.

It isn't clear whether your partner is a party to the mortgage on the original property. If so he/she will almost certainly also be a part owner of the property and he/she will also need to complete a tax return in respect of the income.

I would strongly recommend that you see an accountant who will be able to advise and sort you out pretty quickly. The cost will probably not be great.
Thanks,
jonathan