Is renting a flat a tax deductable cost against rental income?

berlinhammer

Hello there

Apologies if this is a general question but I've looked at gov.uk's renting tax section and I'm finding the wording a bit unclear.

My basic situation is that I work in London and I like living here. I can't afford to buy here but I can afford to buy in the commuter belt. I'd like to buy something in Essex and rent it out, using the income to offset my rental costs in London.

My question is whether I can offset the income tax on my rental income from the Essex property with the rent I will have to pay in London. Obviously if I can't this is a hideously tax inefficient idea and I'll have to forget it!

Thanks for reading, grateful for any advice. C&P from the website below.

Jon

Residential properties

You or your company must pay tax on the profit you make from renting out the property, after deductions for ‘allowable expenses’.
Allowable expenses are things you need to spend money on in the day-to-day running of the property, like:

• letting agents’ fees
• legal fees for lets of a year or less, or for renewing a lease for less than 50 years
• accountants’ fees
• buildings and contents insurance
• interest on property loans
• maintenance and repairs to the property (but not improvements)
• utility bills, like gas, water and electricity
• rent, ground rent, service charges
• Council Tax
• services you pay for, like cleaning or gardening
• other direct costs of letting the property, like phone calls, stationery and advertising

Annisele

No, you can't - sorry.

It would be like trying to offset your own rent against the salary you receive.

berlinhammer

As I feared.

Ugh trying to get on the ladder is depressing.

Thanks for the reply.

Annisele

Remember it's not always a ladder, sometimes it's a snake.

I'm in London too, and can't afford to buy - I try to remind myself that "safe as houses" really is just an expression. Hanging around here does actually help with that; there are people who've made fortunes in property but there are also people stuck in places they don't want to live. At least with renting you just hand in your notice/wait a short time for the end of the fixed term and then walk.

berlinhammer

If rental costs weren't such an unfunny joke at the moment I'd probably agree with you. I'm not a lavish person at all but once I've been savaged by the taxman and my landlord every month and tried to have some kind of social life while not wanting to share my home with loads of randoms I struggle to save a fiver by the end of the month.

Agree that renting is easier to get out of but its so ridiculously expensive at the moment (and the foreseeable future), I'm desperate to buy as long as I don't stretch myself too far. Better get the thinking cap back on!