Tax

[simon]

Just wondering if i rented a house that i had a mortgage for would the income i received from the 'tenants' be taxed ? as it is a capital Gain ?

monty-doggy

Yes but you can offset costs such as mortgage and running costs.there are loads of landlord guides on these forums, that explain it in great detail.

And you need to make sure your mortgage is a BTL as it can cause huge problems with your lender if you don't get it changed!

Werdnal

You declare the rent you receive as income - the same as any other income. HMRC will allow certain expenses in running the letting property, but only mortgage interest can be deducted, so any repayment portion of your mortgage is not allowed.

You may be taxed on the remaining "profit" depending on your other income and earnings. It may also affect any benefits you claim as this extra income has to be declared to them aswell.

When you eventually sell the letting property, as it is not your primary residence, you may also pay CGT on the proceeds if there is a gain in value from the purchase price.

You also have to check out the mortgage terms to see if you are allowed to let it, assuming it is not already a BTL loan. Some lenders agree, but will add extra costs and other clauses like how much rent you can charge, who you can let to and how long for, whilst others refuse and you would have no option but to take out a new specific BTL mortgage (25% deposit value minimum).

jamesml

It won't be taxed as a capital gain, its earned income. You need to be careful about what you deduct - I didn't think the full mortgage was deductible, only the interest paid on the mortgage - but I could be wrong.

jamesml

Beaten to it - to slow to hit enter!

00ec25

how can running a rental business be a capital gain???

you are taking a rental income so are liable for income tax on that not capital tax (CGT applies when you sell the property not when you rent it our for income)

as opthers said above you are liable for tax on the net profit you make after deducting certain costs such as the interest payable on the mortgage

[simon]

Ohh rite, thank you to all who replied and helped me understand

xylophone

https://www.gov.uk/renting-out-a-property/paying-tax