UK rental income - BTL mortgage costs - gross or nett income

[chessie]

My head's spinning trying to work out the UK tax obligations - and the french tax forms - which are sitting on my desk and I keep covering them up !!

I'm so confused - would welcome any advice please.

Last April we purchased a UK property, on a BTL mortgage.   The property is rented out, and so there are the usual letting agents fees, insurance, safety certs etc etc - all costs.

After paying the BTL mortgage, and the costs we have a small, very small income - which is taxed in the UK.

So far so good.

Where I'm feeling my head spin is the french tax form.

This small income is taxed in the UK;  for the moment the interest on the mortgage is included in costs (not yet subject to Osborne's landlord hit) - so the interest payments are regarded as costs....

Now when it comes to the french tax return - do I include the rental income as Gross, ie before any interest payments, letting agents etc - simple straight gross rental income ?

Or can I deduct from rental the interest/mortgage costs, letting agents fees) DEDUCT that from rental income - and then use the net income (ie minus all costs) for the french tax form.....

Change in circumstances causes all kinds of questions doesn't it ?

Have checked with Guidance published by well-known UK ex-Pat monthly newspaper (which is frequently accused of giving wrong information) - and there is reference to declaring 'profit' from rental property.

Now I thought 'profit' was what was left over from income - after costs......

In which case it's the nett figure to be declared in France.

But knowing tax authorities want to take as much as possible from us - not sure if it's correct to just write in the tiny, tiny, amount of 'profit' remaining after paying the mortgage.

I'm really becoming very anxious about this - my head's spinning, and I'm at the point of screaming, because I just don't understand things any more - must be my age or my brain-cells packing up, but I feel so stupid.

Anyone out there in similar circumstances ?    And what the heck happens over the next few years when tax on the the BTL interest payments is imposed ?

I know there's clever, very helpful bods on here - this is desperate plea for guidance - any wise words welcomed !!

Thank you - Chessie

[bkm7]

For the last 2 years I have declared the net income (i.e. after all mortgage, insurance, letting costs and repairs) on 2047 heading 6. I then put this same figure in 4BA and 8TK on 2042. I did not complete the 2044. I put a note on the page where I have declared all UK bank accounts indicating that the declared UK Rental income should be used only be used to calculate the "taux effectif" and social charges should not be applied to this income.

Taxes were charged as I had expected.

B

[chessie]

Oh that's brilliant;  thank you for such a clear answer - and is given from your own personal experience.

Looking at all the costs the income is less than £800 per year.... don't ask !!

But thank you very much for your help - greatly appreciated.

Chessie

[Daft Doctor]

Hi, yes, just use the taxable UK property profit for the calendar year. When you fill in form 2047, you will include this profit in section 4, the total of which then goes across to box 4BA on 2042. This year there is a new box 4BL to tell the impots that under the dual tax treaty you should receive a rebate of French tax payable on the income. This same income, along with any other income taxed in the UK but declarable in France (such as government pensions), is entered again in section 6 of form 2047, then this is transferred over to box 8TK on form 2042. This should prevent any social charges being levied on any of it. I do also fill in form 2044, but once again I only give consolidated profit data, and just mention Royaume-Uni as the address. This is the way our French accountant always did it, so I've just carried on like that.

[Debra]

I declare mine as micro foncier because it's below 15000 per year.  I put it in 4BE, 4BK and 8TK and use the gross amount (ie not deducting taxes, mortgage, insurance, repairs costs), though I noticed that the well known magazine said to put only profit (I think they're wrong). 

If you declare it in 4BA because it's more than 15000 I thought you were then obliged to fill out the 2044 form and explain your expenses.  If you have high costs it's supposedly worth doing it that way even with below 15000 in income.  If I remember correctly, you get an allowance of 30% for expenses with the micro foncier route.  My costs were about 32% so technically I'd be better off doing it the other way but as I don't pay tax anyway, I didn't think it was worth bothering.