Rent refund tax implications?

Rent refund tax implications?

7:23 AM, 18th October 2022, About 2 years ago 10

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Hi everyone, as a good landlord and due to a noisy neighbour (next-door to my tenants playing nonstop white noise) l have given my tenants a 20% rent reduction until I can manage to solve the problem.

My tenants pay the Lettings agent directly the full amount of contracted rent and then I send them the 20% refund for the reduction.

My question is how do l declare this on my tax return?

Is this to be shown as a refund or should I just declare the rent as the full amount minus the 20% reduction?

The agent is collecting the normal contractual rent so they receive their full management charge percentage.

Many thanks

Altan


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M K

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7:50 AM, 18th October 2022, About 2 years ago

I'm not an accountant but I'm pretty sure your income is not dependent on what the agent takes from the tenant per se, but rather what you EARN from the property less costs/expenses. Either you report your earnings as "rent minus refund" or maybe you put down the refund as an expense?

Mr Tee

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8:09 AM, 18th October 2022, About 2 years ago

Refund is other expenditure in your tax return box number 29

student landlord

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8:10 AM, 18th October 2022, About 2 years ago

I’m not an accountant either but regularly give rent refunds for goodwill etc. I declare the amount of rent I actually receive, not what’s on the tenancy agreement (or agency contract in your case). Obviously you will have a record of any refunds should HMRC ever carry out an enquiry. Hope that helps

Judith Wordsworth

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8:37 AM, 18th October 2022, About 2 years ago

Using cash basis add this to your allowable expenses.

Gunga Din

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8:50 AM, 18th October 2022, About 2 years ago

Very kind of you to make refunds, but unless the noisy neighbour is also your tenant, is it your responsibility?

David Judd

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9:36 AM, 18th October 2022, About 2 years ago

What is "white noise"? Didnt know noise had a colour? Call the council and report the neighbours for antisocial behaviour. The Council will likely need proof of the noise so ask your tenants to keep a record of the date, times and type of noise ie loud music, banging etc. Take this for about a month even with recording equipment. Then take this to the council and ask them to investigate. If the noise is that bad, even 20% off the rent is good for a short period, but you also need to do something to stop the noise. If your tenants move out, you will have the same issue with new tenants

Alan

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9:55 AM, 18th October 2022, About 2 years ago

Thanks for the responses much appreciated. I emailed my accountant and he confirmed that l log as a refund

Reluctant Landlord

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10:57 AM, 18th October 2022, About 2 years ago

I;m afraid I'd pass it back to the tenants to deal with - you can guide them to the council but at the end of the day they will need to log all the info to report this back.
I would not have offered a rent reduction - even if the noise stops are they going to tell you if they know they are on a winner here with the LL?

I'd send them a formal email outlining what you advise they do and say you will support them in their actions and given them the council details and ASBO numbers etc.

If you ever come to sell and YOU log an ASBO issue you have to declare it to the new buyer.

Private Housing Provider

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11:03 AM, 18th October 2022, About 2 years ago

Personally I don't think rent reduction should be a practice as a portfolio private housing provider, if we start the precedence of rent reduction it will quickly be no rent soon considering amount of things that can be used to keep reducing (honestly or via manipulation by the tenants and opens up abusing claims). It is like if we buy a house and we have a noisy neighbours, we do not expect Bank of ******* to reduce 20% of the mortgage interest for us until the noise can resolve do we? It is nothing to do with being a good landlord or not. It is pure inappropriate practice that will lead to nowhere good in the future or viable. What should be done in this case is the tackle the issue - the neighbour. Money does not stop the noise or make it less noiser.

SimonP

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20:46 PM, 18th October 2022, About 2 years ago

Reply to the comment left by Alan at 18/10/2022 - 09:55
I don't wish to appear rude but quite frankly your technical tax question should have been addressed to your own accountant: that is what he is there for.

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