Residential Rentals – What’s Happening to Your Losses?
If you own residential rental property, the rules have changed from the 2019/20 tax year onwards, with regards to any losses made.
Rental losses (i.e. where your tax deductible rental expenses exceed your rental income) can no longer be off-set against other income such as business income, wages, interest and dividends. Instead, rental losses will be carried forward to use against residential rental property profits in a future year.
If you have traditionally had rental losses which were offset against your other income, this will no longer be allowed. This could mean you have more tax to pay (or will receive a lesser tax refund).
If you have more than one rental property, the losses on one property can be offset in the same year against profits from other residential rental properties.
Please note that the rules only apply to residential rentals, so this excludes commercial buildings and properties that get rented out on a short-term basis.
Don’t hesitate to contact us if you would like to find out how these new rules may affect you.