Paying tax on income from property
You must declare any income on your tax return when you rent out property. You will pay tax on any profit you make. The amount of tax will depend on:
- the amount of profit
- your other sources of taxable income
- your tax exemption for marginal relief
If you're ordinarily resident in Jersey for tax purposes this also includes foreign property income.
If you're non-resident for Jersey tax purposes you'll pay tax on any profit from Jersey property income at 20%.
Non-residency for tax
Property income also includes any lump sums that are paid to you in connection with granting a tenancy.
Filling out your tax return
If you need help filling out the property income section on your tax return watch our help video.
Property income: tax form help
Calculating the profit from letting income
Jersey property income is taxed on the amount you are entitled to receive in the year. This is the amount receivable on the due date in accordance with the lease or other agreement.
If you're just renting a room in your home, this is treated differently for tax purposes.
Renting a room in your home
When you work out your taxable profit from your rents, you can deduct allowable expenses from your rental income. These expenses must be wholly and exclusively for the purposes of renting out the property. This means that if an expense wasn’t incurred for the purpose of your property rental you can’t deduct the cost against the rental income.
The following are examples of some of the expenses you might incur:
- maintenance and repairs (like for like replacements only, not improvements)
- property insurance
- management and service charges
- capital allowances, if a permanent choice is made for such allowances, on machinery or plant used for maintenance, repair or management of the property
If you took out a loan to buy or extend your rental property then you can claim the interest you have paid as a deduction against the rents.
You can't claim any capital costs, for example the capital mortgage repayments.
Fully furnished property
A 10% wear and tear deduction against the gross rental income (income before any deductions) can be given on a fully furnished rental property.
A fully furnished property is one that can be occupied by the tenant without them having to provide their own:
- moveable furniture (beds, chairs, tables, sofas etc)
- fridge and freezer
- washing machine, dryer or dishwasher
- carpets and other floor coverings
- crockery and cutlery
This deduction is given instead of claiming a deduction for replacing these assets, although you can still claim the cost of repairing them. Claiming a 10% wear and tear deduction does not prevent you from claiming a like for like replacement for fixtures that are part of the building (eg baths, washbasins, sinks, windows).
If you are claiming this deduction, tick the 'fully furnished' box on your tax return and include your claim in the deductions section.
If the accommodation is only part furnished or unfurnished then the 10% wear and tear deduction can't be claimed.
Relief for rent not paid
If you don't collect a defaulted payment by taking reasonable steps to enforce payment or you waive it without consideration to avoid hardship for your tenant, you can treat the amount as if you were not entitled to it.
Expenditure that can't be claimed
The following are some examples of expenses that can't be deducted from your rents to calculate your taxable income:
- Jersey rates
- pre-letting expenses
- improvements to the property (like installing central heating in a property that didn't have it before)
- capital loan payments
- interest on loans that were not for the purpose of buying or extending the property
- the cost of making good your property if the property was in a state of disrepair before you rented it (dilapidation)
- compensation paid, for any reason, to outgoing tenants
- costs of professional advice in connection with applications to the planning and building section of the Department of the Environment
- legal expenses which are incurred for a purpose other than that of maintaining the rental income
If you sub-let you can claim a proportion of the rent you pay in proportion to the number of rooms you sub-let to other people in the property.
Jayne rents a 4 bedroom house. It also has a kitchen diner, bathroom and living room. She sub-lets three of the bedrooms. Her property income is calculated as follows:
|Jayne pays rent of £27,600 per annum|
|Receives income from the 3 sub-lets of £12,480 per annum|
|The property has a total of 7 rooms so the proportion of the rent (£27,600) that can be claimed as a deduction is 3/7ths (number of rooms let over total rooms in the house) = £11,828|
|Income £12,480 less proportion of rent claimed as an expense £11,828 = £652 |
If you own a property in joint names you may need to split the income on your tax returns in proportion to your share of the property.
If you are married or in a civil partnership and complete a joint return any property that you own together can be included on the same tax return.
In some years your property might make a loss if your allowable expenses exceeds your total income. If this happens you can carry forward the loss and offset it against future years income.
Multiple properties and losses
You can group properties together for the purposes of losses but you must keep Jersey and non-Jersey properties in separate pools.
Reduced rents and losses
If you let property to anyone and charge a rent that's below market value, for example to family or friends, you can't group this with any other properties if it's making a loss.
Income from property development
Any profits from property development are taxable. If you are resident for tax purposes in Jersey, this includes overseas property development income.
Income from exploitation of land in Jersey
The annual profits or gains from any mining activities in Jersey are taxable.
Premiums and other payments as rents
Payments of lease premiums where the duration of the lease doesn't exceed 50 years and any other receipts arising to the Jersey land-owner including any receipts from a license to occupy the land are taxable.
The taxable amount of a premium is reduced by 1/50 for each complete period of 12 months (other than the first) that the lease is for.
You must keep accurate records of your income and any expenses you incur.