Renting out Home to downsize

getmore4less

Whatever you do it will cost

The cheapest way has always been to never sell and cycle property through family

These days people move away so not always possible.

Owain_Moneysaver

David_A wrote: »

To be clear, I was going to rent out my house for approx. £2K per month & rent somewhere smaller for £1.5K per month. As a 40% tax rate payer, that means my Net Rental income will be £1.2K per month so I will have to find an additional £300 per month to live in a smaller house.

Does that take into account tax-deductable expenses in renting the large house?

The answer is to downsize to an even cheaper house, say £1k per month. That will leave you £200 better off, which isn't much - probably not worth doing it.

Even if you weren't paying tax at 40%, a gross 'profit' of £500 a month could be swallowed by agent's fees, maintenance, repairs, legal fees, void periods etc.

Instead of letting out at £2k a month to tenants on a standard tenancy, is there a market for short-term holiday lets, corporate lets etc? as these can be significantly more lucrative, although more work as you'd* have to do weekly linen change and cleaning. (*not necessarily you personally, the income from holiday lets may make it worthwhile paying a cleaner a half-day a week to do it for you).

Or instead of lodgers offer B&B - if your house is worth £2k a month in rent it must be somewhere reasonably nice - £50 a night x 4 nights a week is £10k a year, you'd be able to claim expenses against tax or the rent-a-room scheme, and get to meet some new people.

AnotherJoe

Owain_Moneysaver wrote: »

Or instead of lodgers offer B&B - if your house is worth £2k a month in rent it must be somewhere reasonably nice - £50 a night x 4 nights a week is £10k a year, you'd be able to claim expenses against tax or the rent-a-room scheme, and get to meet some new people.

He won't meet new people as he'll be living in the small house !!