What happens if I make a profit on a residential mortgage

reddyman

Hi all,

The scenario is as follows:

I take out a residential mortgage and right to my bank to let them know I will be renting out the property. I pay the fee/increase rate and get a letter confirming it is OK for me to rent out the property.

I take out the relevant buildings insurances etc to cover the tenants.

I ensure the house is safe to rent - Gas/electric certificate etc complete.

The manage to find tenants. The rental income received is £400 more than what I pay for the mortgage. On this basis I make a profit of £4800 per annum.

What are the implications of making this profit? Does tax need to be paid on it? Do any authorities need to be notified?

Hippychick

You will pay income tax.

DVardysShadow

reddyman wrote: »

The rental income received is £400 more than what I pay for the mortgage. On this basis I make a profit of £4800 per annum.

AIUI, you are also allowed to offset your costs [advertising, maintenance, gas cert etc] against the profit as you ahve defined it.

VIGILANT22

reddyman wrote: »

Hi all,

The scenario is as follows:

I take out a residential mortgage and right ( write) to my bank to let them know I will be renting out the property. I pay the fee/increase rate and get a letter confirming it is OK for me to rent out the property.

I take out the relevant buildings insurances etc to cover the tenants.

I ensure the house is safe to rent - Gas/electric certificate etc complete.

The manage to find tenants. The rental income received is £400 more than what I pay for the mortgage. On this basis I make a profit of £4800 per annum.

What are the implications of making this profit? Does tax need to be paid on it? Do any authorities need to be notified?

Wrong...you don't right (write) to your bank....you apply for permission for consent to let....and if yr a FTB....& it's in a relatively short time of puchasing you would most likely be refused.....

You will find many posts like this on here, where people have thot the same as you.....:rotfl:

RobertoMoir

reddyman wrote: »

What are the implications of making this profit? Does tax need to be paid on it? Do any authorities need to be notified?

You are liable for tax on the profit left after you have paid the costs of the business (for you are indeed running a business if you do this). Good rule of thumb - if you make a profit on something, the taxman is nearly always entitled to dip his beak in it. IIRC you can even be taxed on illegal income!

herbiesjp

If you are buying to let it out, you would need a BTL mortgage.

You can offset mortgage interest and property costs against the income to minimise your tax liability.

HMRC needs to be notified of this income.

barrybarryr

Or you just do it and don't tell the bank (which I'm sure lot of people will do).

ukcarper

If you sell house would you be liable for capital gains tax

VIGILANT22

barrybarryr wrote: »

Or you just do it and don't tell the bank (which I'm sure lot of people will do).

House goes up in flames thanks to the tenants....insurance claim invalidated..bank demands it's money back!!...owner bankrupted....income (rental) not declared...hmrc prosecute.....smart ah! barrybarryr

RobertoMoir

barrybarryr wrote: »

Or you just do it and don't tell the bank (which I'm sure lot of people will do).

I'm sure lots of people do but that doesn't make it a good idea. Lets face it, lots of people smoke but I'm pretty sure that doesn't make it a good idea.

ukclarkkent

just read the thread and have a question about renting out a house that is owned outright(no mortgage)

is this the same, i.e. if the house is rented out and profit is made then it's taxable?