tax advice with regard to renting out our house...

March2012

1 - we have a few card debts that i would like to pay back once rented out the hosue but i wanted to find out how it works on the tax front. can we offset any of these debts against our house rental? thanks everso for any help and advice.

2- question 2: would it make any sense to remortgage to bundle our credit card debts together too?

3- would number 2 improve our credit card rating?

thanks everso!

Lovelyjoolz

March2012 wrote: »

1 - we have a few card debts that i would like to pay back once rented out the hosue but i wanted to find out how it works on the tax front. can we offset any of these debts against our house rental?

NO! Of course you can't. Being a Landlord is a business, not a crafty way to lose your personal debt. Being a Landlord means you have legal responsibilities and obligations - make sure you are fully aware of them. You must treat it as a business, register for Self Assessment tax returns and pay tax on your profits.

Profits are calculated by deducting your LL expenses from the rent you receive. These expenses include the interest element of your mortgage only, letting agent fees, gas safe costs, buildings insurance costs and some repairs/maintenance costs. The do not include your personal expenses such as credit card debts or your living expenses.

March2012 wrote: »

2- question 2: would it make any sense to remortgage to bundle our credit card debts together too?

3- would number 3 improve our credit card rating?

thanks everso!

What is number 3??

PLEASE do not enter into being a landlord lightly. There are far too many bad amateur landlords out there already.

junglejim2

What are the credit card debts for?
How do they relate to the rented property?

holly_hobby

You may only offset directly related business expenses against your rental income for tax purposes.

Personal debt, personal mortgages, personal expenditure, etc, obviously have no relation to the business, and as such they are not a permitted deduction.

If you are over indebted, instead of renting the house out, sell it and use the free equity to paydown your commitments.

Hope this helps

Holly

March2012

thanks for your input jungle jim

junglejim2 wrote: »

What are the credit card debts for?
How do they relate to the rented property?

March2012

thanks for your input. not sure was "craftily" trying to lose personal debt though just trying to see what was the best and easiest way to pay them off quite quickly actually!!

Lovelyjoolz wrote: »

NO! Of course you can't. Being a Landlord is a business, not a crafty way to lose your personal debt. Being a Landlord means you have legal responsibilities and obligations - make sure you are fully aware of them. You must treat it as a business, register for Self Assessment tax returns and pay tax on your profits.

Profits are calculated by deducting your LL expenses from the rent you receive. These expenses include the interest element of your mortgage only, letting agent fees, gas safe costs, buildings insurance costs and some repairs/maintenance costs. The do not include your personal expenses such as credit card debts or your living expenses.



What is number 3??

PLEASE do not enter into being a landlord lightly. There are far too many bad amateur landlords out there already.

March2012

and not sure how long it would take to get a mortgage again?

holly_hobby wrote: »

You may only offset directly related business expenses against your rental income for tax purposes.

Personal debt, personal mortgages, personal expenditure, etc, obviously have no relation to the business, and as such they are not a permitted deduction.

If you are over indebted, instead of renting the house out, sell it and use the free equity to paydown your commitments.

Hope this helps

Holly

runninglea

Have you got permission from mortgage lender to let the property rather than live in it yourselves?

March2012

any reason? thanks

runninglea wrote: »

Have you got permission from mortgage lender to let the property rather than live in it yourselves?

BitterAndTwisted

You cannot let the property without the permission of your lender. You negotiated the loan based on it being your residence, hence why it's called a residential mortgage and not a commercial one.

If you've no or little equity and are carrying debts on top of that, it sounds like you don't have the financial resilience to weather any of the potential storms that becoming a landlord can entail.

It could be a matter of out of the frying-pan into the fire.

March2012

be? when everything is in good condition here? and yes do know i need to get permission as have looked into this already.tyhanks

BitterAndTwisted wrote: »

You cannot let the property without the permission of your lender. You negotiated the loan based on it being your residence, hence why it's called a residential mortgage and not a commercial one.

If you've no or little equity and are carrying debts on top of that, it sounds like you don't have the financial resilience to weather any of the potential storms that becoming a landlord can entail.

It could be a matter of out of the frying-pan into the fire.