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sell or rent out - the future?

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Comments

  • BitterAndTwisted
    BitterAndTwisted Posts: 22,492 Forumite
    10,000 Posts Combo Breaker
    If you let the property for the next two years how much will you have in savings once you've paid tax on the rental-income? Don't forget that as it's an I/O mortgage 100% of the mortgage-payments can be offset against the income for tax-purposes. Plus all of the other allowable expenses.
  • mylastpound
    mylastpound Posts: 119 Forumite
    Part of the Furniture Combo Breaker
    If you let the property for the next two years how much will you have in savings once you've paid tax on the rental-income? Don't forget that as it's an I/O mortgage 100% of the mortgage-payments can be offset against the income for tax-purposes. Plus all of the other allowable expenses.

    erm that might be above my head

    I rented it out for the exact mortage repayment amout, so didn't make on it at all. I did it through a letting company and wasn't aware on any tax?

    in 2 years I hoped to have saved £25k

    can you give me a bit more detail on your comment above - cheers
    3-6 Emergency Fund, No96: £1,000 / £2,000 - House Deposit: £11,000 / £11,000 - Holiday Fund: £100 / £1,300 -
    June 2018 Grocery Challenge £61.59 / £250
  • BitterAndTwisted
    BitterAndTwisted Posts: 22,492 Forumite
    10,000 Posts Combo Breaker
    If the total amount of rental-income was equal to the interest-payments, then you haven't broken even, you've made a loss. Where did the money come from for tenant-referencing, check-in inventory, agent's commission on rent collected, gas-safety checks, repairs and maintenance?
  • mylastpound
    mylastpound Posts: 119 Forumite
    Part of the Furniture Combo Breaker
    If the total amount of rental-income was equal to the interest-payments, then you haven't broken even, you've made a loss. Where did the money come from for tenant-referencing, check-in inventory, agent's commission on rent collected, gas-safety checks, repairs and maintenance?

    thankyou for this

    all that came out of my own pocket - if I did it again I would do it differently as I can get more rental income that my mortgage repayment but I found someone asap and was in a rush to get in, so it wasn't properly thought out - but 2nd time round I would get more rent and so forth

    are you sayin if I got more rental than my repayment I would have to pay tax on this?

    show I see a financial advisor over this do you think?
    3-6 Emergency Fund, No96: £1,000 / £2,000 - House Deposit: £11,000 / £11,000 - Holiday Fund: £100 / £1,300 -
    June 2018 Grocery Challenge £61.59 / £250
  • BitterAndTwisted
    BitterAndTwisted Posts: 22,492 Forumite
    10,000 Posts Combo Breaker
    Are you saying if I got more rental than my repayment I would have to pay tax on this?

    Yes, that is precisely what I said. In fact, even if you didn't make a profit you should still have declared the rental-income to HMRC in any case. Then you could have offset all of those expenses which you funded out of your own pocket against your tax-bill. HMRC have the ways and means of finding out that you've been renting your home without declaring it, so I suggest you do this right away. Like immediately!

    And no, you don't need a financial advisor. If you're not competent to fill out your own tax-return you should pay an accountant to do it on your behalf. That could cost you about £150 but you could find that you might be entitled to a rebate of a similar amount for the additional expenses which you haven't offset.
  • mylastpound
    mylastpound Posts: 119 Forumite
    Part of the Furniture Combo Breaker
    Yes, that is precisely what I said. In fact, even if you didn't make a profit you should still have declared the rental-income to HMRC in any case. Then you could have offset all of those expenses which you funded out of your own pocket against your tax-bill. HMRC have the ways and means of finding out that you've been renting your home without declaring it, so I suggest you do this right away. Like immediately!

    And no, you don't need a financial advisor. If you're not competent to fill out your own tax-return you should pay an accountant to do it on your behalf. That could cost you about £150 but you could find that you might be entitled to a rebate of a similar amount for the additional expenses which you haven't offset.

    arrh I see, I would of thought the letting company would of made me aware of this seen as I paid them to manage ect

    so B&T do you think I should rent out until 2015 when my CTL ends and plough money in to make a repayment or should I just sit and wait for a buyer - but I cant drop any lower

    ?? :beer:
    3-6 Emergency Fund, No96: £1,000 / £2,000 - House Deposit: £11,000 / £11,000 - Holiday Fund: £100 / £1,300 -
    June 2018 Grocery Challenge £61.59 / £250
  • BitterAndTwisted
    BitterAndTwisted Posts: 22,492 Forumite
    10,000 Posts Combo Breaker
    Managing a rental-property is a million miles away from managing your tax-affairs! You DO NOT want to fall foul of HMRC for non-declaration of your rental-income regardless of whether you made a "profit" on it or not. There are penalties for not doing so.

    My own feeling is that you should keep hold of that PPI £7k for in case of dire emergencies, use the not-having-to-pay-rent to live with your b/f as a savings stream and let the property for as long as your lender will give you Consent-To-Let. Be in no doubt whatsoever that CTL is not open-ended and being on I/O will mean that they will be looking to get you onto a repayment mortgage at some point, or worse for you a BTL. If either of those happen, you're going to need that £7k and savings and more.
  • mylastpound
    mylastpound Posts: 119 Forumite
    Part of the Furniture Combo Breaker
    Cheers B&T - thankyou for taking the time to read and advise me on this - very grateful - you've opened a new door and I need to research more regarding HMRC - thankyou
    3-6 Emergency Fund, No96: £1,000 / £2,000 - House Deposit: £11,000 / £11,000 - Holiday Fund: £100 / £1,300 -
    June 2018 Grocery Challenge £61.59 / £250
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