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Len_Brenan
Posts: 10 Forumite
in Cutting tax
Hi all
First post, I have spent the last couple of hours searching these forums and think I have all my answers but would greatly appreciate more experienced eye giving us the thumbs up or laughing me out of court.
I was made redundant a few months ago, I've got a new job but its in the other end of the country and so will be relocating. With the housing market in the way it is I don't fancy selling my property, and so my wife and I have decided to rent it out. My mortgage at the moment is around £150K at 2.25%, so can I take (roughly) £3750 off any money I collect in rent this tax year? It will also be let furnished and I see you can take 10% wear and tear allowance, is this 10% or your rental income or 10% of the estimated value of the furnishings, I was going to go with 10% of my rental income. Is there anything else I should offset to reduce my profit? All my furnishings have been bought over the last couple of years to for our use (had never anticipated renting out) so I dont think the cost of the sofas, beds, ironing board et al can be used but would love to be told otherwise.
The mortgage is in both our names, I take it that we split any profit from the rental 50 /50 and add it to our seperate incomes for the year and pay income tax at whichever bracket we are in?
I know this is a mountain of stuff, as I say if there is anything obvious I would much appreciate a yay or nay!
Many Thanks
First post, I have spent the last couple of hours searching these forums and think I have all my answers but would greatly appreciate more experienced eye giving us the thumbs up or laughing me out of court.
I was made redundant a few months ago, I've got a new job but its in the other end of the country and so will be relocating. With the housing market in the way it is I don't fancy selling my property, and so my wife and I have decided to rent it out. My mortgage at the moment is around £150K at 2.25%, so can I take (roughly) £3750 off any money I collect in rent this tax year? It will also be let furnished and I see you can take 10% wear and tear allowance, is this 10% or your rental income or 10% of the estimated value of the furnishings, I was going to go with 10% of my rental income. Is there anything else I should offset to reduce my profit? All my furnishings have been bought over the last couple of years to for our use (had never anticipated renting out) so I dont think the cost of the sofas, beds, ironing board et al can be used but would love to be told otherwise.
The mortgage is in both our names, I take it that we split any profit from the rental 50 /50 and add it to our seperate incomes for the year and pay income tax at whichever bracket we are in?
I know this is a mountain of stuff, as I say if there is anything obvious I would much appreciate a yay or nay!
Many Thanks
0
Comments
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Hi
Yes you can deduct your mortgage payments from the rents received.
You can deduct W&T at 10% from the rents received. If you pay water bills/council tax on the property as part of the rents received you have to strip these out of the W&T allowance - ie.. 10%*(Rent - rates). Only if you pay them, rather than passing them to the tenant.
You can also deduct any fees incurred in renting the property - e.g. advertising, insurance
Theres no deduction for the furnishings.
Correct r.e. 50-50 split.0 -
Just a word of caution, you can only deduct your mortgage INTEREST payments.£705,000 raised by client groups in the past 18 mths :beer:0
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Many thanks for the replys, invaluable0
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