If you cant sell a house should you rent it and move on? I am not sure

disney_cjd

We are stuck like many others. We can not sell our place despite dropping the price etc etc. Its not a reflection on the house, its the market but we are stuuck.

So do we rent it out and try and move on that way? This is where I am sure you will all guide us in teh righ direction.

I dont want to spil my finances everywhere but we have about 120k left on teh mortgage and the house is worth about 300k. We have had an agent rental person round and said we could get around 1400 a month in rent.

I woudl want to relerase as much equity as possible for a move but I understand you need to leave 15% equity in the house. Is this correct?

Also I understand I will have to pay tax at 40% on the rental income (i appriciate youa renot accountants and I will need to talk to one if I proceed but just pointers for now).

So that takes the rental income down to about 840 a month

Is this the correct way of working this out??

Anyway of getting out of paying 40 percent tax on teh rent? What about if we started up a company or soemthing?

As I say this is just ideas we are just thinking outloud

Thanks

m1ntie

Hi, I am not an accountant and you are correct you should consult one before you make a decision. However I can tell you that you will only pay tax on the profit element of the rent received.
eg Rent £1400
Less mortgage interest say £800
Less agents fees say £140
Less insurance say £40
Less repairs Say £50
Sundries Say £20
Total £1050

Taxable profit £350

These figures are estimates of what your expences may be per month.

The tax will be paid at either standard rate or higher rate depending on your total income. You may also be liable for CGT when you sell. Also be sure you understand that renting can be a lot of hastle.

Good Luck

DJClare_2

Regarding renting, for tax you can offset against rental income the portion of your mortgae payments that cover interest costs. You can also claim 10% of the income for wear and tear on the property. You then pay tax on whatever remains, not necessarily at 40% it depends what tax bracket your other income takes you into.

Regarding your move, would it not make sense to rent your property out and weather the storm in your own rental accommodation for a few years and then buy when things have calmed down a bit?

disney_cjd

Many many thanks for this. What a dumfuss had not clocked it was on the profit only. I doubt I will be making a profit

I will look at buy to let rates and see whats occuring cost wise. This is really good news thanks so much

(no idea why this is all underlined btw

LandyAndy

I presume there is a really good reason why you can't just stay living there?

disney_cjd

LandyAndy wrote: »

I presume there is a really good reason why you can't just stay living there?

Yep there sure is