Move back into own property or rent elsewhere?

Thrugelmir

Emmzi wrote: »

You're currently evading tax and possibley have invalid insurance on your property if no one knows you are renting it.

I'd wait and see what the fines from the bank and taxman are before deciding anything.

Tax is only now going to be a problem if the property has only been let out a year.

OP suggest you take advice and prepare yourself for a bill.

tylerjames

well thinking about this.. the landlord thing seems a lot of hassle... to get my own place back i think i'll have to serve notice to my tenants.

it's not ideal as i dont think they want to leave but i'm sure they wont try and stay beyond the notice date.

it's not ideal for me either as ideally i want to live somewhere where there's a bit more going on, not out in the suburbs.

i don't understand why i can't offset any rent i pay for a flat i want in the right location against the rent i receive on my mortgaged property?

i would like to re-iterate that i have worked since i was 18, i have had one break from work for under a year and i didn't claim anything, so please don't think i'm intentionally avoiding tax.

SuzieSue

Well, if you don't want to stay living with your parents then it would be much easier for you to move in to your own flat.

What do you mean by off-setting the rent you pay with the rent you receive? Do you mean for tax? Why do you think you should be able to do that? You can offset any mortgage interest you pay and any allowable expenses you incur (eg letting agents fees, gas safety certificate charges) against any rental income you receive, so you should have very little, if any, tax to pay. But you should ring up HMRC and come clean before they catch up with you. They are likely to be sympathetic if you tell them that you didn't realise that you have to fill in a tax return.

Also, your lender should be ok if you tell them that you hadn't realised that your consent to let only ran for a couple of years. Are you on a fixed rate or variable rate mortgage? If you are on a fixed rate, then your lender might not even charge you anything for consent to let but if you are on a variable rate they might increase your rate.

tylerjames

I am on a fixed rate, I am going to call my lender in the week and find out their policy on letting out.

What I said about offsetting, well what if I rented out my own property just because I wanted to live in a different location? I would still have to pay rent elsewhere instead of paying my mortgage. So why should the rent I receive on my mortgaged property be taxed, if I am paying rent elsewhere?

Ideally I want a small flat nearer my work, but looking at rightmove, the price for a one bedroom flat is around £700. My mortgage on a 2 bedroom out of town is £505. What I am saying is can't I just rent somewhere for £700, and use the rent I recieve on my place (just over £700 a month) to pay for my rented flat in the location I prefer? I would not exactly be making any profit would I?

DVardysShadow

tylerjames wrote: »

So why should the rent I receive on my mortgaged property be taxed, if I am paying rent elsewhere?

Why should the money I receive for my job be taxed if I am paying rent?

SuzieSue

tylerjames wrote: »

I am on a fixed rate, I am going to call my lender in the week and find out their policy on letting out.

What I said about offsetting, well what if I rented out my own property just because I wanted to live in a different location? I would still have to pay rent elsewhere instead of paying my mortgage. So why should the rent I receive on my mortgaged property be taxed, if I am paying rent elsewhere?

Ideally I want a small flat nearer my work, but looking at rightmove, the price for a one bedroom flat is around £700. My mortgage on a 2 bedroom out of town is £505. What I am saying is can't I just rent somewhere for £700, and use the rent I recieve on my place (just over £700 a month) to pay for my rented flat in the location I prefer? I would not exactly be making any profit would I?

The tax rules don't allow you to set off the rent you pay against rent you receive. However, by off-setting the mortgage interest you pay and any landlord's expenses you are effectively getting a lot of tax relief on your rental income.

As you are on a fixed rate, depending in the lender, you are in a good position to get consent to let. I know RBS and Halifax are fine about it.

tylerjames

Thanks, well going back to my original post, my best option is probably moving back in my own place, as I will have a 2 bedroom for just over £500 a month. If things get tight I can rent a room out.

What is the point in renting elsewhere for £700 a month for a smaller flat? Especially when this option includes the responsibility/tax/consent/uncertainty of being a landlord?

So thanks for all the posts and helping make my mind up!

SuzieSue

tylerjames wrote: »

Thanks, well going back to my original post, my best option is probably moving back in my own place, as I will have a 2 bedroom for just over £500 a month. If things get tight I can rent a room out.

What is the point in renting elsewhere for £700 a month for a smaller flat? Especially when this option includes the responsibility/tax/consent/uncertainty of being a landlord?

So thanks for all the posts and helping make my mind up!

Yes, that is by far the best option if you really can't live at your parents anymore. But if you are seriously considering renting out a room (which is a very sensible option to get more money), then your flat will not be your own and as I have said, I personally would stay at my parents are a few more years and save as much as I could to pay off my mortgage and become mortgage free. But, each to their own. For me, being mortgage free was more important than anything, but it obviously it isn't for you.

BitterAndTwisted

Get your all of your records in order for when you declare the rental-income for tax purposes. HMRC take a rather dim view of people who don't pay their taxes, so you should expect to have some fines levied, so you need to set aside some savings for when the inevitable happens.

Kynthia

Your rental business is completely separate from your living expenses. I agree with the above posters about getting your paperwork in order and then declaring the property income. If not you could get found out at any time and they are less understanding when they catch you. I've had a friend that hasn't let her property out for years but got a phone call out of the blue from the HMRC.

Being a landlord isn't fun so I would either move back in or sell. Even though your property hasn't increased in value, you aren't in negative equity and the freedom might be worth it. A lodger is a good idea to help with your living costs if you reduce your work hours to study or start a new career at entry level.