New Scheme Variation Rules on Investment Property

andyharris1976

Question about the New Scheme Variation Regulations

Hi,

I currently have an investment property worth about £200,000. It is made up of a mortgage of £100,000 and about £100,000 of equity in it. The rental income is about £8000 per annum. I pay approximately £6000 in interest only mortgage repayments per year, and another £2000 in standing charges etc. Therefore, I make no money on this so called "investment"!

Under the current scheme, the statutory 8% of the equity of the property (£8000 per year) is taken into account for the purposes of maintenance assessment, despite me making no money from the flat.

Under the new scheme, I understand that it will be a flat rate (for 2 children) of 12% of the gross income. However, does anyone know if that 12% will be of the £8000 gross rental income, or 12% of the £0 that I made after deducting mortgage interest and costs etc.

Thank you.

wayne0

from what i gather it will be 12% of TAXABLE income...

kevin137

Can i ask why you would not just remortgage and move the cash/equity from the rental property into the mortgage on your own property thus keeping you under the amount you would have as an investment and meaning you won't pay on something you are not earning from...???

I know morally people would be against this, but it is not illegal or anything, just how the rules are laid out...???