Tax liabilities when you rent out your property?

kwackerman

Hi all ( again)!!

Further to my previous post ( Selling property and living off the proceeds) another option my father is considering is the following.

Renting his current property to a family member and moving to the area of his choice and renting a property there for himself. Obviously he would be using the money he charges my brother for rent to cover his own rental costs but what are the tax implications with this idea?

How much income tax would he have to pay if he charges say £700 per month rent? He will need to pay out a similar amount to rent a property in his chosen area.

Any other pitfalls??

As always many thanks for any advice you can offer.

Andy

HappyMJ

Income minus expenses divide by 5. Assuming you pay tax at 20%. If higher get advice.

antrobus

kwackerman wrote: »

How much income tax would he have to pay if he charges say £700 per month rent? He will need to pay out a similar amount to rent a property in his chosen area.

I believe that what you need to know is that your father would be taxed on the £700 rent he received, whilst the similar amount of rent he paid would be coming out of his own pocket, and would not be an allowable expense against his rental income.

kwackerman wrote: »

Any other pitfalls??

Yes, there are various legal requirements that arise as a result of becoming a landlord.