Rental Income from foreign property

I have a Japan residential apartment renting out with monthly mortgage. The whole rental arrangement was outsourced to a Japan rental management company and I will be received rents minus all charges/fees/expenses/withholding tax/Japanese taxes two times a year (June and December) I would like to know in this case should I declare rental income only when I receive the payment? Or I have to estimate the accrued monthly rent as I would not have any actual payment details for Jan-Mar 2024 And for converting Japanese yen income into pounds, should I use the fx rate when I receive the payment (i.e. end of June and end of December) or have to use monthly fx rate for each months Since there is a couple of fees/charges/expenses, I would like to know which one below will be allowable expenses for tax deductions and how much allowed. A) letting agent fee B) building management fee C) bank Transfer fee D) fixed asset city planing tax E) tax accounting fee F) insurance premium G) building depreciation expense H) mortgage interest expense I) Tax Expenses J) Withholding Tax / Return of Withholding Tax if actual tax expense is not allowable expense

Hi ,
 

Thank you for your question . The cash basis is the default basis for most property businesses and under this basis , property business receipts and expenses are accounted for when the money is actually paid or received, not on the date it was earned or expenses incurred. Ref to : www.gov.uk/hmrc-internal-manuals/property-income-manual/pim1092  . Details of allowable property business expenses can be found in the property income manual at ref to : www.gov.uk/hmrc-internal-manuals/property-income-manual/pim1900 and at the help notes of form SA106  . Thank you .

Hi, not a HMRC Admin but wanted to add while it is taxable on receipt, if the rents are collected by a letting agent then you will be taxable on the payment when the agent receives it (not when the agent pays it to you). This is because as your agent they are acting on your behalf and are receiving payment on your behalf. https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim1094

Hi HMRC team, After looking into the manual for some time, it is too many material and very confusing to understand. Could you please advise if I took out a mortgage loan to finance my oversea property (which is rent out), is the loan interests payment an allowable property property business expense? Thank you

Hi
Thank you for your question. Yes, you can claim expenses for the interest on a mortgage to buy a non-residential let property. For further guidance on allowable expenses, please see Allowable expenses

My property is a residential apartment in Japan, but I bought it and let it out for rental income (i.e. I don't use it for my residential uses). Does it count as non-residential let property?

Question on foreign tax regarding an EEA rental property. I have a holiday house in Portugal. I am a UK resident etc.I have a rental licence and declare paid guests to SER and the tax authorities in Portugal. I paid Euro 474 last year in tax for my rentals. In the UK I declare my EEA rental home, However, I made a loss on my home of £8000 for tax purposes so no tax due in the UK. Can I claim back the Euro 474 tax I paid in Portugal from HMRC ? If not can I carry it forward to offset against UK tax in future years? Please let me know James

Hi nelk24,
No,this is still a residential property.
Thank you. 

I came across 20% finance cost as tax relief for residential landlord, it should be applicable in my case, right?

Hi james59,

You can only claim Foreign Tax Credit Relief if you have UK tax to pay on the same source of income. As you state you do not for this year, then you would need to claim a refund back from the Portuguese authorities.

You cannot carry forward the tax to a future year.

Thank you.

Hi nelk24

Yes, if you have a mortgage/loan on the rental property.

Thank you

Hi HMRC Admin Team, I have a residential apartment in Hong Kong with monthly mortgage and rent out for the period of two years between December 2022 to December 2024. The amount of loan interest for the 2023/2024 is £10,000. For filling the amount in 24.1 of SA106, we should put the amount of £10,000 as residential property finance cost. Is it correct? Thanks for your advice. Ed

Hi ,
 

Thank you for your question. The costs of obtaining a loan and/or any interest payments should go in box 24. 1 for 2023-24. Thank you