Losses against tax

[alan30]

If I rent out a house that I pay a mortgage on and the rental income is less than the mortgage and maintenance costs can I claim tax relief against my main earned income from employment?

[factor-fiction]

I suppose your logic is that if you make a profit on the rent one year and if that profit is taxed but if in the following year you make a loss then it's only fair that you should be able to get tax relief for that loss.
I don't know the answer I'm afraid but I can see a problem. If I were to rent my house out to my children at a very low rate and then claim tax relief on the difference between the rent and the mortgage that sounds like a good scam to me. I don't think the HMRC would be happy with that!

[buildersmate]

I'm not an expert on this either (where's Skyline when you need him). However this this link is a starting point for you.
http://www.hmrc.gov.uk/manuals/tctmanual/TCTM0 4006.htm

Deep in the HMRC website is a series of manuals that define how the 'rules' shall be interpreted. Look at the second paragraph. What I believed happens is that you can carry-forward or backwards losses made on the property income between different tax years, but you can't transfer profits and losses between earned income and property income/losses - even in the same tax year.
The second para confirms about moving the property income between years. If you dig around in this area of the website you might find something. Otherwise its a call to the HMRC call-centre.

[alan30]

Thanks to you both. No family members involved so no intention of scamming HMRC - perish the thought :-)

[Lindt21]

losses from rental income can only be set against future years rental income profits, they can't be set against any other type of income I'm afraid the only exception to this is if the loss is due to agricultural expenses and the rental business uses land for agricultural business. You can only carry the losses forward to use against future rental profits!

Losses from furnished holiday lettings can be set against other income this is because they are treated as a trade loss.

[Skyline D]

You also can't claim capital mortgage repayments as a "cost" for tax purposes, though I think you can claim the associated interest.

Is that what the original poster meant?

I'd need to double check. I don't actually deal with income tax much myself except in terms of PAYE and simple trader's return, I'm an auditor to trade. However we have people in our office that do and I could find out.