Withheld Rental Deposit and Tax

[dai1983]

Sorry if this has been discussed previously.

I'm in the process of filling in my 13/14 tax return for my rental property. During this period we had a change of tenant and we withheld part of the old tenants deposit due to damage or other issues with the house. This was done on the advice of our letting agent and we were told this is what usually happens.

The deposit was held for the following reasons:
-cost of cleaning property
-10% of quoted cost for new carpet in two rooms due to small permanent stains.
-cost of removing gas and electricity meters the tenant had installed which itself was a breach of tenancy agreement

In the case of the cleaning and meters, the cost and income cancel each other out. In the case of the carpet, our letting agent assured us that this was standard practice and that we could claim the money and hold onto it until we came to replace the otherwise immaculate carpet in a few years.

Question is do I need to declare the expenses as a cost and the deposit held as an income?

[Eric Mc]

dai1983 said:

Question is do I need to declare the expenses as a cost and the deposit held as an income?

Yes.

[dai1983]

Cheers Eric! I guess I knew the answer but had to check I was doing the correct thing

[Eric Mc]

It just becomes part of the overall calculation of rental income and expenditure.

[sumo69]

As Eric says - yes.

It's treated as a dilapidation payment ( negative repairs) and taxed accordingly.

David