Want to rent out our home and live in another rented property - TAX?

Garnett_F

We're in a tricky position.

We need to relocate for my work, but we don't want to sell at the moment.

One option is to rent out our house to tenants, and become tenants of a different property close to my office ourselves.

It seems that we will have to pay income tax on the rent we receive.

This seems a bit harsh since we'll essentially be passing it straight on to our new landlord.

I can see the point of the tax where rent is income for a landlord who owns more than one property, but I was wondering if there was any kind of exemption or relief for people who aren't looking to go into landlording to make money.

silvercar

Your mortgage interest costs and maintenance expenses will be allowable expenses against the rental income, so you only pay tax on the profit you make.

Pixie5740

You paying tax on your rental income whilst renting somewhere else is really no different to a BTL investor paying tax on their rental income whilst paying rent or a mortgage for their own home.

There are certain allowable expenses you can deduct to reduce your tax liability but ultimately if you don't want to be taxed on the rental income then don't let the property out.

booksurr

Garnett_F wrote: »

We're in a tricky position.

We need to relocate for my work, but we don't want to sell at the moment.

One option is to rent out our house to tenants, and become tenants of a different property close to my office ourselves.

It seems that we will have to pay income tax on the rent we receive.

This seems a bit harsh since we'll essentially be passing it straight on to our new landlord.

I can see the point of the tax where rent is income for a landlord who owns more than one property, but I was wondering if there was any kind of exemption or relief for people who aren't looking to go into landlording to make money.

your point is totally flawed

you need to live somewhere, you can either rent or buy. Either option will mean you must spend from your post tax income. You choose how you spend your own money, do you think you should be able to offset the cost of the food you eat in your new location because it might or might not be more expensive than your old place?

similarly you choose not to sell but rather to keep on the old property purely because it generates an income for you. What you spend that income on is utterly irrelevant, it is income and therefore is subject to income tax (the clue is in the name)

PasturesNew

How far is it?
Would it be possible to stay in your house and just you go away, staying as a Mon-Thu lodger with somebody else?

marksoton

Garnett_F wrote: »

It seems that we will have to pay income tax on the rent we receive.

This seems a bit harsh since we'll essentially be passing it straight on to our new landlord.

Indeed. It bloody annoys me that HMRC won't let me have some of my income free of tax to pay my mortgage apart from my personal allowance...

AnotherJoe

Garnett_F wrote: »

I can see the point of the tax where rent is income for a landlord who owns more than one property, but I was wondering if there was any kind of exemption or relief for people who aren't looking to go into landlording to make money.

LOL. Plenty of landlords don't make money anyway.
In any case, just how do you think that would work?

G_M

Garnett_F wrote: »

....

It seems that we will have to pay income tax on the rent we receive.

This seems a bit harsh since we'll essentially be passing it straight on to our new landlord.

I too resent this.

I rent a modest penthouse in central London in a serviced appartment block (lift, underground parking, terrace swimming pool) and use the rent I receive from my BTL portfolio (7 properties 'up north') to pay for this. I make no profit as the rent I receive barely covers the cost of my home.

Yet HMRC insist on charging me tax!

theartfullodger

Garnett_F wrote: »

....It seems that we will have to pay income tax on the rent we receive.

This seems a bit harsh since we'll essentially be passing it straight on to our new landlord.....

poor you, can't think why you take this position: The clue is in the name "Income Tax" - a tax on INCOME.

mrginge

Drugs are bad for you.

bigfreddiel

marksoton wrote: »

Indeed. It bloody annoys me that HMRC won't let me have some of my income free of tax to pay my mortgage apart from my personal allowance...

Ah yes MIRAS springs to mind here, Anyone remember it?

Mortgage Interest Relief At Source, basically you paid your mortgage from untaxed income. It was al handled by increasing your tax code, and you could have up to £30k mortgage. Doesn't sound like much but you could buy a four bed house in the southeast for £40-50k

Those were the days.

In your case you've become an accidental landlord through choice, if you don't like it, sell your house and buy nearer your new workplace, maybe they offer a relocation package to deal with costs. Company I work for will actually give you market value for your house so you can buy near your new place of work, within the same company of course.

Cheers fj