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  • FIRST POST
    • ses6jwg
    • By ses6jwg 19th Apr 17, 12:01 PM
    • 5,179Posts
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    ses6jwg
    CMS and Rental income
    • #1
    • 19th Apr 17, 12:01 PM
    CMS and Rental income 19th Apr 17 at 12:01 PM
    Hello.

    Me and my partner are moving house and considering renting out our old house. We won't be making any 'profit' in real terms as the rental income we will make will go towards paying our new mortgage i.e. mortgage on old property is 196 pcm rental income 500 but new mortgage will cost 500+ per month.

    I am on a direct pay arrangement wth the new CMS.

    Do the CMS take rental income into account or does she have to ask for it to be included? If she does are any costs offset against it? Anyone with any experiences?
Page 1
    • HoneyNutLoop
    • By HoneyNutLoop 19th Apr 17, 8:33 PM
    • 465 Posts
    • 372 Thanks
    HoneyNutLoop
    • #2
    • 19th Apr 17, 8:33 PM
    • #2
    • 19th Apr 17, 8:33 PM
    You can't offset the mortgage from the house you live in against the rent from your old place when deciding what constitutes profit.

    Your profits will be defined as per relevant tax legislation - so rental income less allowable business expenses. If you're not familiar with what those may be, you may want to head over to the house buying, selling and rental board and check out the relevant pages on gov.uk. However, one of the first things you should know is that the capital repayment part of a mortgage has never been an allowable expense and changes are being phased in from this tax year which switches mortgage interest from an allowable expense to a restricted tax relief.

    The housing board also contains useful threads about your responsibilities as a landlord, which you may want to familiarise yourself with before you make the leap.

    In terms of child maintenance, if your profits for tax purposes are more than 2500 a year, the other party can apply for an unearned income variation and you will be required to pay child maintenance on the profits.

    So, if you rental income is 500/month = 6000 a year, that means your allowable expenses for tax purposes would need to exceed 3500 a year.
    I often use a tablet to post, so sometimes my posts will have random letters inserted, or entirely the wrong word if autocorrect is trying to wind me up. Hopefully you'll still know what I mean.
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