Paying tax on rental income

xebex

I hope to rent out my flat to go travelling at the end of the summer, my mortgage is £525 and i plan to rent the flat out for £525, i know i will have to do a tax return, but surely i won't have to pay any tax if my rental income is simply covering the mortgage payments?

Any advice appreciated

Thanks

sequence

You can only offset the interest on the mortgage, not the main repayment.

TrickyDicky101

Is your mortgage interest-only or is it a repayment mortgage? Will you be letting the place furnished? Using an agent?

xebex

hi,

it's a repayment and interest mortgage, being let part furnished, trying not to go through an agent but may have to.

Benji

Mortgage interest is allowable against tax, but not the capital repayment.

You may also be able to claim an allowance for the furniture, you certainly can for furnished, but you will have to check with HMRC regarding part-furnished.

If you are not using an agent, how will you comply with section 47 of the 1987 Landlord & Tenant Act (you need to provide an address in England/Wales)

Unless you get dispensation from HMRC to receive rent in full, your tenant will need to pay standard rate tax on the income to HMRC and pay the balance of the rent directly to you.

Have you investigated how you will get your flat back when you return from travelling?

Have you asked your lender for permission to let? This will probably increase your interest rate by 2% or so. You will probably also need permission from your freeholder.

Have you investigated what your responsibilities/liabilities will be? For instance you need to get an EPC before you begin marketing the property, you need to get any gas appliances checked yearly, you need to know the electrics are safe.

Do you ave a plan as to how you will cover the mortgage if the tenant stops paying for any reason?

tbs624

OP - google HMRC and "property income manual", plus SA105 and related helpsheet. This will give you all the info you need on what you can set down against the rental income.

See this post for other info relevant to newbie LLs