How to split rental profit, if I have a smaller part of mortgage

snickpan

I can't fathom it.
My mortgage payment £320
Her mortgage payment £520
Property rental profit £1700

Who gets what each month?

Guest101

Tax man? Are you married? Agency fees? Sinking fund?


When you say profit do you mean income? (a rent of 2540 per month seems odd)

thriftylass

Total mortgage payment is 840, your contribution is 320 i.e. 38%. Hence, it could be 38% of 1700, i.e. £648. Not counting in fees, tax etc yet. Someone more knowledgable might be along soon.

booksurr

if you are married then the default for tax purposes is 50/50 unless you have documented it as different respective shares and notified HMRC of that fact

if you are not married the tax split is whatever you agree it to be

if you are asking what is a "fair" split based on the fact you are paying different amounts towards the mortgage then the answer is the share is not based on the relative mortgage payments. The fair solution is based on what percentage you each OWN - ie who put what size deposit down as well as who pays what each month

snickpan

We're not married. Business only.
Due to different deposits ( mine is bigger), her loan is £150000, mine is £90000. I own more of the house, and pay a smaller mortgage.
Percentage seems fair, if I own a bigger percentage of the house.

House value £380000, half each mortgage of £190k.
She has a deposit of £40k, I have £100k.
Obviously there will be tax involved, I just don't know where to start with divvying out the rent

Guest101

snickpan wrote: »

We're not married. Business only.
Due to different deposits ( mine !!!!!!), her loan is £150000, mine is £90000. I own more of the house, and pay a smaller mortgage.
Percentage seems fair, if I own a bigger percentage of the house. - I presume it's a joint mortgage, so technically you both owe the full mortgage. You just happen to own more equity.

House value £380000, half each mortgage of £190k.
She has a deposit of £40k, I have £100k.
Obviously there will be tax involved, I just don't know where to start with divvying out the rent

So this isn't a property you already own, you're talking about the future?


Well lets take some figures.


income £1700


- 20% for tax (roughly as there will be some tax deductible things, such as interest - at present)
- 10% for agency fees
- 5% sinking fund? (10% would be more sensible)


So that leaves 60% or £1000 roughly, after mortgage payments you have £120 to actually sort out.

snickpan

Please don't dwell on outgoings, if I own 15% more of the house ( because I have more savings ) do I keep 15% more of the incoming rent (of which there'll be fees and charges to pay out)

snickpan

How would we sort out the remaining £120

Guest101

However you want.


Give it to charity, agree that you keep it, or she keeps it, or whatever you like. As long as it's declared and taxed correctly as income. It's entirely upto you both what you do with it, you just need to agree.


Do you know anything about being a landlord?

silvercar

You split the rental income according to the ownership split and then you both use the amount that you receive to pay your individual shares of the mortgage.

snickpan

Another example
House = £200k, I have £90k savings so £10k mortgage.
Business partner has a £100k mortgage.
If total rent is £1000, do we just split it, even though I have invested £90k more?