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Do I need an accountant if renting out home in UK?

Do I need an accountant if renting out home in UK?

Old Aug 28th 2018, 3:47 pm
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Default Do I need an accountant if renting out home in UK?

I'm going to be renting out my house in England, I've hired a property mgt company to deal with collecting rent, repairs etc but am wondering if I need an accountant too?

The mgt. company put me in touch with one accountant who I've spoken with but felt uncomfortable, when I asked about his fee he said he couldn't say, it will be higher depending on what he does....obviously I don't like that.

Also, would I need an accountant every year or can I do things myself?

Is anyone renting out their house in England?

Thanks very much for any help/advice!
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Old Aug 28th 2018, 4:05 pm
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Default Re: Do I need an accountant if renting out home in UK?

Hello Mtnskier
Welcome to the forum. Could you clarify if you are after an accountant in the UK or USA, and whether this is to complete your UK tax return, US tax return or both?
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Old Aug 28th 2018, 5:24 pm
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Default Re: Do I need an accountant if renting out home in UK?

Ideally you'd have a dually US/UK qualified tax adviser or accountant who could prepare both the UK return and the US return - including advising you about claiming depreciation, mortgage gains or losses, foreign tax credits and a s199A deduction.
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Old Aug 29th 2018, 1:02 am
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Default Re: Do I need an accountant if renting out home in UK?

Personally, for the UK tax return an accountant is likely not needed if you just have rent income in the UK. The forms are simple, and very well documented as to what you can deduct. Dimple version is rent minus mortgage interest, insurance, management company and then any repairs/maintenance - that last one can get a little tricky depending on what it is, but all well documented. Eg, plumber to fix a broken tap is maintenance and fully deductible, but replacing windows or a roof could be considered a capital expense and different rules apply as to what can be deducted.

Also, if your total profit is less than the annual uk tax allowance, then you won't have an tax to pay in the uk, assuming are you eligible to get the allowance ( uk citizens are)

The USA tax situation is more complex and for that many will recommended a tax accountant.
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Old Aug 29th 2018, 12:05 pm
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Default Re: Do I need an accountant if renting out home in UK?

Agree that you do not need a UK tax accountant for your UK tax return. The online tax return by HMRC is quite straightforward and takes you through it step by step. If you are a new landlord, I would assume that the property is in good repair already so any maintenance will be deductible, and you won't be doing any loft conversions or conservatory building. Make sure you complete Form NRL1 so that your agent pays you the rent without deducting basic rate tax. If that is the only income you get, it is likely that the "profit" will fall within your tax allowance so you won't owe the UK government any money, but you should do a return every year so that its all on record. When I did it several years ago, my "profit" was so low (about £2k) that I didn't even have to fill in a tax return - it was advised but not required. When I returned I continued to let the property and HMRC queried why I was now declaring the income. I just sent a letter laying out my figures over the years I was abroad, and justifying not doing a return and they were ok with that. In hindsight I should have just done a return each year to keep things straight.

For the US, I would use a US based tax advisor with experience of overseas (preferably UK) clients - at least for the first year until you get your head around the vastly different approach. Depending on your circumstances you may then feel ok to do subsequent tax returns yourself.
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Old Aug 30th 2018, 5:08 am
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Default Re: Do I need an accountant if renting out home in UK?

Technically you should not be using the hmrc website for filling returns if you are not resident. There biggest difference for UK properties is that depreciation is taken over 39 years instead of 27. This may have changed in recent tax changed.

There have also been some recent UK tax changes. If you have owned the property a long time or have a mortgage on it you may be in for some expensive tax bills if you sell.
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Old Aug 30th 2018, 1:12 pm
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Default Re: Do I need an accountant if renting out home in UK?

Originally Posted by mrken30 View Post
There biggest difference for UK properties is that depreciation is taken over 39 years instead of 27.
Where does depreciation factor in to UK property taxes? It certainly is not in my tax return (simple letting of a single unfurnished property without a mortgage)
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Old Aug 30th 2018, 1:37 pm
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Default Re: Do I need an accountant if renting out home in UK?

The depreciation on your UK property is on your US taxes.
the UK used to have an option for 10% deduction for wear and tear, but that went last year.
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Old Aug 30th 2018, 3:25 pm
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Default Re: Do I need an accountant if renting out home in UK?

Originally Posted by mrken30 View Post
The depreciation on your UK property is on your US taxes.
the UK used to have an option for 10% deduction for wear and tear, but that went last year.
thanks for the clarification. I believe the UK deduction for wear and tear used to be only for furnished property.
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Old Jul 19th 2019, 9:33 pm
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Default Re: Do I need an accountant if renting out home in UK?

Hi, just adding on to this topic. I see that it is recommended to file the UK tax returns self using the HMRC forms and providing details regarding the UK rental income. Assuming the annual rental income is under the tax free bracket we wouldn't pay any tax in UK. However do we also need to declare this income in US tax returns and do we need to pay tax in the US on this income?
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Old Jul 20th 2019, 2:23 am
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Default Re: Do I need an accountant if renting out home in UK?

Originally Posted by Vasuedileb View Post
Hi, just adding on to this topic. I see that it is recommended to file the UK tax returns self using the HMRC forms and providing details regarding the UK rental income. Assuming the annual rental income is under the tax free bracket we wouldn't pay any tax in UK. However do we also need to declare this income in US tax returns and do we need to pay tax in the US on this income?
Yes you will need to pay tax. You will also file a schedule E
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Old Jul 20th 2019, 2:55 am
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Default Re: Do I need an accountant if renting out home in UK?

Originally Posted by Mercury39 View Post
Personally, for the UK tax return an accountant is likely not needed if you just have rent income in the UK. The forms are simple, and very well documented as to what you can deduct. Dimple version is rent minus mortgage interest, insurance, management company and then any repairs/maintenance - that last one can get a little tricky depending on what it is, but all well documented. Eg, plumber to fix a broken tap is maintenance and fully deductible, but replacing windows or a roof could be considered a capital expense and different rules apply as to what can be deducted.

Also, if your total profit is less than the annual uk tax allowance, then you won't have an tax to pay in the uk, assuming are you eligible to get the allowance ( uk citizens are)

The USA tax situation is more complex and for that many will recommended a tax accountant.
Good summary. Exactly the situation we find ourselves in each year with our UK rental income, and handle all the forms ourselves. Only needed a UK accountant for the tax return year that we sold a property there.
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Old Jul 20th 2019, 4:28 am
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Default Re: Do I need an accountant if renting out home in UK?

Don't forget the SA109 form
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Old Jul 20th 2019, 7:48 am
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Default Re: Do I need an accountant if renting out home in UK?

Don't overlook Form 8858 reporting Foreign Branch income which was new from the 2018 US return.
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Old Jul 21st 2019, 3:16 am
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Default Re: Do I need an accountant if renting out home in UK?

Originally Posted by Cook_County View Post
Don't overlook Form 8858 reporting Foreign Branch income which was new from the 2018 US return.
Isnt this unlikely for most people unless they own their property within a company?
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