Renting a room in our house out for the first time

[Deleted User]

Badger_Lady wrote: »

In terms of pricing and taxation, you're fine if you're just letting out one room and receiving an income of up to £4,250 a year thanks to the Rent a Room Scheme. Any more than that, you start becoming a commercial landlord and should consider the legalities and taxes around that. This limit is OK for most houses, but consider it in setting prices - it's equivalent to £354 a month!

The 4250 is the pure profit side, if you expect your lodgers to pay 1/3rd or 1/2 of the bills then this doesnt count as rent

Also if you have a mortgage the rent money can be offset against the interest on the mortgage, for example if you pay 6K in interest and take 5950 in rent after the bills then you also dont have to pay tax :T

moanymoany

seven-day-weekend wrote: »

Hope this helps

Thanks for the link to the Landlord Zone. Very useful. It made me think about things and the forms are perfect - and free!!!!!;)

optique

Yant1 wrote: »

The 4250 is the pure profit side, if you expect your lodgers to pay 1/3rd or 1/2 of the bills then this doesnt count as rent

Also if you have a mortgage the rent money can be offset against the interest on the mortgage, for example if you pay 6K in interest and take 5950 in rent after the bills then you also dont have to pay tax :T

This is incorrect. You cannot claim both Rent a Room and expenses such as bills or mortgage interest. You have to choose. From the government's page on Rent a Room:

How the scheme works

The Rent a Room scheme is an optional exemption scheme that lets you receive a certain amount of tax-free 'gross' income (receipts before expenses) from renting furnished accommodation in your only or main home.

The principal point to bear in mind is that if you are in the Rent a Room scheme you can't claim any expenses relating to the letting (for example, wear and tear, insurance, repairs, heating and lighting)."

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnPropertyAndRentalIncome/DG_4017804

[Deleted User]

Yep what I meant is go under what is the higher threshold, if your interest is higher then the rent a room threshold then you go under that, but like you say its one or the other not both added together, sorry i didnt make this clear.

redkitty_3

Ching_Ching wrote: »

Hi All,

I'm seriously thinking of doing the same - renting a room in my place to help with the mortgage.

Where is the best place on the internet to advertise a room for rent rather than a whole house or flat?

( I can't edit a newspaper ad once it is printed. )

And has anyone got a draft 'contract' that I can have a look at so that I don't miss out anything important?

Thanks very much,

Ching_Ching

Easyroommate.com is good, but you have to pay to reply to messages if you're advertising a room. You can also try gumtree.com as it's totally free and I've had just as good a response from that in terms of numbers.

As regards lodgers, I think you need to make it clear about what is important to you. I have a real thing about mess, so I always make it clear that tidyness is important to me before I get someone in. Luckily everyone's always got the message about that! Lol

Badger_Lady

ixwood wrote:

hmmm, I know someone who lets out 2 rooms and is probably over that. I'll warn him. How serious is it? Is he likely to be hounded and asked for records?

He should fill out a tax return (more details on the link) - as pointed out above, there may not be a huge amount (if any) tax to pay, and evading it is always a risk.

Of course, if he's got away with it so far it's likely the government hasn't found out, but if they did he could be in trouble... not my subject but I guess they could ask for a whole load of back-dated tax!

If it were me I'd start doing things properly now but pretend the 2nd person had only just moved in (or back-date to when the most recent tenant did move in).

silvasands

You should provide a rent book but make sure it`s the right type ,`Landlord in occupation`, as there are a few types and I believe you have to legally provide one for your lodger.

corris3

I think I may have posted this before but one way to check if you can cope with lodgers before entering into any long term arrangment is to contact a local language school and see if they need homestay accommodation for overseas language students, we did this for about 9 years until becoming mortgage free and basically for set periods of time anything from 2 to 12 weeks we would have one or more students staying with us who had room, breakfast, and dinner plus lunch at the weekend. The good thing for us about doing this was that we could choose when we had students so holiday times we could say no and always had the back up of the school. Pay was about £90 per week, more if an ensuite room was offered about £125 I think.

[Deleted User]

silvasands wrote: »

You should provide a rent book but make sure it`s the right type ,`Landlord in occupation`, as there are a few types and I believe you have to legally provide one for your lodger.

There is a legal requirement for teh council to provide a rent book only if paid monthly. There is no such law for private landlords residing or not. If your a residing landlord a license agreement is nice but theres nothing wrong with a verbal contract.

nelly_2

Joey in an episode of Friends, advertised - 'non smoker and non ugly' and he ended up with Elle Mcpherson as his lodger <

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definately worth a shot imo