Tax on my rented houses?

dimbo61

First of all the 20% TAX bit might be wrong if you are a higher rate tax payer!!!
I only have one property to rent but use an accountant to make best use of allowances ( repairs, advertising costs,Letting agent fees, accountant costs, Gas safety checks, EPC, Electric certificate etc)
You MUST submit a tax return even if you are making a loss ( which you can carry forward!!)

J0SH

Thanks for all the comments, I need to check my sums as im doing something wrong, i dont think im accounting for the actual mortgage payment and just using the intrest amount! im going to read up on the websites and talk to my friend (the accountant!)

Kevie192

J0SH,

The main thing you are getting wrong is where you are accounting for estate agents fees. The taxpayer doesn't pay for your fees, you still have to pay them!

You deduct them from your income in the same way as your mortgage interest, then work out the tax on the balance.

HTH

Kevin

J0SH

Kevie192 wrote: »

J0SH,

The main thing you are getting wrong is where you are accounting for estate agents fees. The taxpayer doesn't pay for your fees, you still have to pay them!

You deduct them from your income in the same way as your mortgage interest, then work out the tax on the balance.

HTH

Kevin

Thanks so lets try this again!

rent 700 pm/8400 pa
mortgage 755 pm/9060 pa
fees 70 pm/840 pa
mortgage intrest 200 pm/2400 pa

so each month i will be paying 55 to cover the mortgage and 70 for fees = 125 pm

how do i now work this out to how much of a loss i have?

Fire_Fox

Get an accountant as already suggested by several of our resident professional landlords.

Kevie192

That's the point, you haven't made a loss in the eyes of HMRC, since mortgage repayments do not count. You can only offset the INTEREST.

Income: 8400
Outgoing: 840 + 2400 = 3240
Total profit: 8400 - 3240 = 5160
Tax due: 5160 x 0.2 = 1032 (if not a higher rate tax payer)


Kevin

Suarez

J0SH wrote: »

Thanks so lets try this again!

rent 700 pm/8400 pa
mortgage 755 pm/9060 pa
fees 70 pm/840 pa
mortgage intrest 200 pm/2400 pa

so each month i will be paying 55 to cover the mortgage and 70 for fees = 125 pm

how do i now work this out to how much of a loss i have?

You can't offset the mortgage capital. Just the interest.

J0SH

Thank you Kevie192

This is what i was after!

so TAX for my current house if i rent it out will be 1032 pa(forgetting about higher tax rates or any other things i could take off ie repairs, insurance etc)

J0SH

Kevie192 wrote: »

That's the point, you haven't made a loss in the eyes of HMRC, since mortgage repayments do not count. You can only offset the INTEREST.

Income: 8400
Outgoing: 840 + 2400 = 3240
Total profit: 8400 - 3240 = 5160
Tax due: 5160 x 0.2 = 1032 (if not a higher rate tax payer)


Kevin

J0SH wrote: »

Thank you Kevie192

This is what i was after!

so TAX for my current house if i rent it out will be 1032 pa(forgetting about higher tax rates or any other things i could take off ie repairs, insurance etc)

Now how will it all work when i put my current rented house in the mix?

rent 650 pm
mortgage 495 pm
mortgage int 3420 pa

Suarez

Rent £7,800

Less :
Mortgage interest £3,420

Profit £4,380

Tax Due £876