Buy To Let

Discussion in 'Finance, Property, Law' started by brokerboy, Feb 4, 2013.

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  1. If I buy a property to let, is tax payable on ALL the rent I receive , or just the part the is left over from paying the mortgage ? Thanks for any help.
  2. I did my self assessment on my rental property for the first time last year. I was able to deduct the interest charged on my mortgage (assuming you have capital repayment) from the rental income, as this is a finance expense. My mortgage provider told me both the interest and capital payments for the tax year very quickly over the phone.

    I also included the cost of management fee charged by the agent, annual gas certification, energy certificate (EPC), building & contents insurance (business/landlord policy don't forget) and the annual 95 quid fee charged by my mortgage provider to let out my property. All deductible expenses against rental income. There may be others you can claim against the income to reduce your tax obligation.

    Edit to add - I was leaving the UK, had no other UK income apart from savings, and single.
    • Like Like x 1
  3. sup rec

    sup rec LE Book Reviewer

    Tax is payable on ALL of it if the mortgage is in your name only and you earn enough to pay tax. I am confident in this answer because I am in the same position. If the mortgage is taken out in two names and one does not earn enough to pay tax then only half of the income is taxed. ie as my mortgage is in 2 names and I pay tax then my half of the income is taxed. As my wife doesn't earn enough to pay tax (including her half of the rental income) her half is not taxed. If the income takes you over the upper tax threshold then you will pay the upper limit on the amount that is over. They will deduct repairs etc at the price you pay from the taxable amount, but again if the mortgage is in 2 names only half will be deducted.Hope this helps.
  4. My mortgage is more than I take in on rent, because I don't make any money on renting out my house, I only pay tax on my wages. Rent it out for less than you pay out
  5. Just the net element. If your inrerest exceeds the rent, you can carry the loss forard, too.

    If your purchasing a property costing >say 500k drop me a line as I can halve your SDLT.

  6. Thanks for all the help lads.
  7. CONGRATULATIONS!! You have just won the "most long winded reply that doesn't answer the question" award.

    As already stated, you only pay tax on money over and above your outgoings. If your mortgage is £100 a month, and your rental income is £110, you pay tax on the £10.
    • Like Like x 5
  8. Check with a qualified accountant on this (i.e do not take my word for it) but I believe you are also allowed to write off 10% of the gross rent as "wear and tear"

    Other Arrsers may have a more informed view on "wear and tear" in terms of renting property. I'm lazy and get an accountant to do it all, but better that than let my crap maths get me in schtuck with the taxman.
  9. I'm looking at doing this for a pension, I'm hoping to buy two houses in the next two years, use the rent to pay most or all of the mortgage and hopefully when I hit 65 I'll have a damn site better income than any pension around at the moment.

    I need to get cracking on this one actually, need to start researching the options.
  10. On your profits only.
  11. You certainly do.

    Good thing that house prices never ever ever fall in value and interest rates never ever ever rise.
  12. sup rec

    sup rec LE Book Reviewer

    PrinceAlbert - Get in, I have won something.. But your answer is wrong. The answer you have given is for an interest only mortgage. If you have a repayment mortgage it is only the interest that doesn't incur a charge by the tax man, otherwise it is all taxed - and I am pretty sure this bit answered it "Tax is payable on ALL of it"
  13. I was under the impression you could only claim tax on the interest.
    Otherwise that would mean I could get the house for nothing by writing the capital off against tax.
  14. Ravers

    Ravers LE Reviewer Book Reviewer

    Speak to a decent accountant, you might pay him 100 quid, but he'll save you 200.

    As I understand it through my own place which is rented out, you essentially pay tax on any profit that you make over and above your annual tax allowance which is just over 8 grand a year.

    So, for argument's sake, let's say you have no income other than the rent from your gaff. You charge the tenants 20k a year rent, your mortgage (interest only of course) is 10k a year.

    So your profit thus far is 10k per year.

    With me?

    As mentioned before, your tax allowance is just over 8k, but to keep things simple we'll just call it exactly 8k.

    So you will now be taxed on the remaining 2 grand a year you make over your 8 grand allowance.


    Out of that 2 grand you can claim for wear and tear, furniture, cleaning costs, letting fees, gas safety certificate, gardening etc. etc.

    Let's say your annual running costs for the place are 2 grand, then you pay zero tax.

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  15. I'm pretty sure I'm right.