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Renting out my flat
NOVASTAR
Posts: 233 Forumite
Dear All
Please could anyone let me know whether I need to alter my fixed rate mortgage (fixed until 2011) to a BTL mortgage as I am considering renting my flat out for a 6 month duration and renting a house for the same amount of time with the other half.
I know that I am liable for paying tax on the profit above a certain amount earnt and that I will have to put the deposit away into a TDS, but not sure on the mortgage side of things.
All help gratefully received.
Please could anyone let me know whether I need to alter my fixed rate mortgage (fixed until 2011) to a BTL mortgage as I am considering renting my flat out for a 6 month duration and renting a house for the same amount of time with the other half.
I know that I am liable for paying tax on the profit above a certain amount earnt and that I will have to put the deposit away into a TDS, but not sure on the mortgage side of things.
All help gratefully received.
0
Comments
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Contact your mortgage company - there is different small print in every mortgage and every mortgage company does things differently. I had an Open Plan with the Woolwich and they invited me to fill in a form for them to decide if I could rent out the property. I suspect it would be a standard evaluation of how much mortgage, how much deposit you'd paid, current estimated value, your history of payments. If so, expect their decision making to take up to 3 weeks.
You will pay tax on any profit. So that is on income (rent) minus costs (mortgage + other costs). If you are making no profit, there's no tax.
You'd need to be filling in a tax form anyway - there's a section in there about income/expenditure from rents.0 -
PasturesNew wrote: »You will pay tax on any profit. So that is on income (rent) minus costs (mortgage + other costs). If you are making no profit, there's no tax.
I believe (though I may be wrong) that tax relief only applies to the interest part of the mortgage repayments. You will have to pay tax on the repayment part of the mortgage, as in reality this is a profit --- simply a profit with which you are immediately buying part of the property from the mortgage lender.
So you are practically guaranteed to make a profit --- it's simply that some/all of that profit is used to pay off the mortgage.
There was someone on here a few weeks back complaining that she wasn't making a profit on her BTL. What she meant was that she wasn't making enough profit to pay the mortgage and have some cash in hand.
Peter0
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