Renting my flat - Mortgage Advice

housebuyer_abc

sindygirl58 wrote: »

why are you implying that she is not complying? that had nothing to do with her question.

you pay back the capital from what you make on the house sale.
you wont pay tax on rental income as you are not making a profit.
Keep it, let it out to someone you have no ties with and increase the rent.

See a specialist buy to let mortgage advisor for quotes and advice.
you seem to be perhaps fixed in at a hight rate? My deal finished last year and my BTL mortgage is 2.9%, variable rate.

They may actually owe tax as the mortgage is a repayment and they can only claim tax relief on the interest element of this.

However even if nothing is owed you need to inform HMRC of your status as a landlord within 3 months of the first tenancy starting and definetly before submitting a tax year for a year in which you received rental income, I think the OP needs a quiet and apologetic word to the tax office before the tenant (or a disgruntled neighbour) does it for them.

Cassidyi

Thanks for your helpful replies so far (Im male by the way....lol) I am fixed in with Nationwide on a repayment mortgage until Feb 2012 at about 5.3% im guessing I cannot change this to a buy to let mortgage until then.

Looking at similar properties it looks like the maximum rent I could expect to achieve is between £400-450 I pay £442 on a mortgage.

I am unsure whether to leave the mortage on repayment but as you say perhaps I should seek some advice I have looked at the HMRC website and im very confused about the tax situation I originally thought as there was no profit being made there was nothing to delcare but I will have to make enquiries.

housebuyer_abc

You always have to declare the income. What you are doing is confusing income with profit.

Let's ignore the capital/interest repayment mortgage thing for a while

You rent at 425 for a year - this is an income of £5100.

Now your mortgage is £442 which is approx £5300 add in ground rent and insurance and you are at £6000.

None of this changes the fact you have earnt £5100 in income, what you do is fill out a self assessment and on the rental pages put £5100 as income and £6000 as related expenses. This is a loss of 700 so no tax to pay (you can't offset property losses against other income though) - however if next year you made a profit (higher rent/lower mortgage) you could offset last years loss.

Now onto the mortgage on a repayment with 442 a month thats approx 330 interest and 112 capital, so you can'f use the 112 capital in the related expenses bit so your costs are now 3,960 per year plus the other items so around £4,700 which actually means you make a profit for tax reason of £400 which meansyou owe the tax man somewhere between £80-£150 depending on your tax bracket.

Cassidyi

housebuyer_abc Thank you for your useful post I think im begining to make sense on how this all works now.

Am I right in thinking a self assesment tax form can only be filled in once a year? Have I missed the deadline?

Im a standard rate tax payer so I guess payments should be at the lower rate of that bracket ive done and am about to do internal decorations (ie painting) does that count as an expense?

I should think im stuck on my fixed rate mortgage until Feb 2012 but am I right in thinking a buy to let mortgage is the best way to go?

Thanks again.