What happens if I make a profit on a residential mortgage

VIGILANT22

yes.........sorry I should have expanded...yes it is as it is income..however certain expenses could be offset.....

firesidemaid

ukclarkkent wrote: »

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?

yes, depending on how much and how much you earn beside this

Gorgeous_George

If the property was let before 6 April 2009 you need to file a return online by 31 January.

GG

VIGILANT22

Gorgeous_George wrote: »

If the property was let before 6 April 2009 you need to file a return online by 31 January.

GG

Don't frighten them anymore!!!....:)

RobertoMoir

ukclarkkent wrote: »

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?

Mortgage or not has nothing to do with it. Your income is taxable, there's even a clue in the name of the tax.

You can offset the costs of the business (again if you're renting a house you're in business as a landlord) against the amount you're liable to be taxed for but that's about it.

The only legal way I know of to avoid this is if your overall income falls below the taxable threshold (iirc this is why most kids don't pay income tax; not because "kids don't pay tax" but because they don't normally earn enough in a year to get above the taxable threshold).

VIGILANT22

RobertoMoir

As a member on this forum would it not have been more helpful to discuss ways to mitigate tax liabilities rather than referring to tax avoidance...

Where has that rolling your eyes gone!...:(

Pincher

The rules and obligations are different if it's a holiday let.

As an ongoing rental, it's basically the rental income,
against which you deduct outgoings ALLOWED by the Inland Revenue.

So, if you have a £200,000 flat, for which you get £12,000 rent gross a year, you typically have these outgoings:

Mortgage interest 5% on £150k (no principal) £7,500
Letting Agent commission (10% + VAT on £12k) £1,410
Landlord Building Insurance £400
Gas Safety certificate £100
Ground Rent £50
Building Service Charge £1,000
Wear and Tear Allowance (10% on £12k) £1,200

Total Deductibles: £11,660

So you have £340 of taxable income (£12,000 - £11,660)
which you will pay at your highest tax rate.

If you pay 40% tax, you would have paid 40% tax on the £12,000 income, if there were no allowable deductibles.
So it's like for every £100 you spend, you only have to put in £60, and the Inland Revenue chips in £40. Your effective rate of mortgage is 3.0%!

RobertoMoir

VIGILANT22 wrote: »

RobertoMoir

As a member on this forum would it not have been more helpful to discuss ways to mitigate tax liabilities rather than referring to tax avoidance...

Where has that rolling your eyes gone!...:(

I was - still am in fact - amazed that an adult needs to ask if income is taxable. I thought I'd keep the message simple and focussed on avoiding a very large fine and tax bill. Now that's saving someone money... and stress.

VIGILANT22

RobertoMoir wrote: »

I was - still am in fact - amazed that an adult needs to ask if income is taxable. I thought I'd keep the message simple and focussed on avoiding a very large fine and tax bill. Now that's saving someone money... and stress.

I agree!....on saying that I am "amazed" by the majority of posts on here...:)

Pincher

VIGILANT22 wrote: »

I agree!....on saying that I am "amazed" by the majority of posts on here...:)

Yes, but have you talked to the sales hyenas who tried to con these rabbits? With salesmen that slow, you need really dozy rabbits, otherwise how does the economy continue.:D