Buy to let tax implications

Cateb

Hi,

My partner and I are getting a buy to let but are not sure of the tax implications, can anyone help out? Thanks

somethingcorporate

From a going concern basis its a business so like all businesses you pay tax on the profits.

Revenue - income from rent

less

Costs - Allowable expenses (the list is vast as to what you can offset against rental income including interest on the mortgage, wear and tear allowance if let furnished etc).

equals

Profit.

This bottom figure is what you will pay tax on.
There are also capital gains tax implications if the property increases in value, you are taxed on the gain in value.

SecondTimeBuyer

I have rented out a property will be over and above your regular income. You will be required to submit a self assesment tax form at the end of the financial year and you should ensure that you declare your regular income (including PAYE) on the same form.

There are some areas of tax releif you can claim, these are:

• interest on the mortgage
• insurance
• maintenance of the property
• Letting agency fees
• 10% of the rental income each year to cover depreciation in the value of furnishings

You will also be subject to Capital Gains Tax if this is a second property.

tbs624

Get the information you need straight from the horse's mouth . Google HMRC and "property income manual (PIM)"

Also take a look at form SA105 and its related help pages

ognum

think carefully about which of you has ownership of the property!

If it is owned 50:50 then the tax distribution will be 50:50 . I done of you is a higher rate tax payer you may want to consider a different ownership split.

many people believe HMRC will allow you to allocate the profit as you see fit, this is not true.

BitterAndTwisted

Buying a BTL property and then looking into the tax-implications is putting the cart before the horse. This could be a loss-maker before you've even started. What's the projected yield on this business venture?