Renting Out My Main Home - Tax Implications

13eastie

The complexities of scheduling moving home for my growing family mean that I'm considering renting out my apartment so as to use the income to rent another, larger property.

The net rental income will have to be declared on my tax return.

Will I be able to deduct the cost of renting my new home from this net income prior to the tax being calculated?

If not, it seems I would be liable for a lot of tax on an income that was never realised.

Many thanks for any advice.

martinsurrey

No, you can’t deduct the rent on your new home on your tax return.

The income was realised, how you decide to spent it has nothing to do with it, in this case you decided to rent a house, but you could live under a bridge if you so choose (although not very practical).

Werdnal

No you cannot deduct your own accommodation expenses from your rental income. Its like telling the tax man that he cannot have his tax payment from your salary this month as you need to pay your rent, a large utility bill or get the car MOT'd. What you "spend" the rental income on is irrelevant to the tax you may have to pay.

There is much to learn about letting, a lot of which is covered here:

http://forums.moneysavingexpert.com/showpost.php?p=41160642&postcount=12

Many people who think renting out their home to move on is a good idea, are often oblivious of the other legal implications and costs involved - for instance, you have an apartment, and if it is leasehold, you must check your lease to see if you can let it. Then there is mortgage consent - will they allow you to let? They may agree, adding extra costs for the priviledge, or they may refuse!

Read the linked thread and all the links it contains, then sit down and work out if you can afford to do this. You need to factor in what would happen if you had bad paying tenants who could take months to evict, a major expense like heating failure and ongoing mortgage payments - all whilst not receiving any rent. Only you can work out if you can afford to cover the costs (and possible losses) involved in running a letting property, and still keep a roof over your own family's head!