Self Assessment Tax Bill Terror!

AdrianC

wildcardsa wrote: »

It would appear this has indeed taken me into a higher tax bracket.
The mortgage is a Fixed BTL at 2.7%. This is my first year at doing a Self tax assessment as I usually pay Tax PAYE in my employment, so EVERYTHING is a surprise at the moment!

OK, but you did do some homework first, right?

Again - is it a repayment or an interest-only mortgage?
At 2.7%, a repayment mortgage would be a little over £200k, and an interest-only about £410k. If it's repayment, then only the interest portion - about £450/mo - can be set against the income for tax. And, as has been said, from 2017/18, that'll only be at base rate.

The repayment portion is just an investment you're making towards not having to pay the interest in the future... And, as Guest says, this IS part of your profit.

As for
You haven't "made £400". You've made £1,900 after tax for the year.
I calculate that If i make £3960 profit and pay £3500 tax, thats a little over £460 profit. The extra £1500 is the first part of my bill for the nxt financial year!

Sorry, my bad. I mis-read, and thought your £400 was after that £1,500 too.

Sigh, so best is probably just to pay it all, sell the house and not bother with SA after its sold and they take capital gains tax. (another thing)

But you did do the sums in advance, right...? And this is in a year with no voids, no maintenance costs, no damage, no unpaid rent, no eviction costs...

wildcardsa

Guest101 wrote: »

You didn't make 460 profit you made £460 + the repayment element on your mortgage.

Aaaaaaaah !!! See, I'm a right numptie, that's why I need you gurus out there helping me. Damn, why doesn't life come with a manual! Thanks

glasgowdan

Coming out of a year as a landlord cash neutral.is ok... it's an investment for future, not a profitable income/job in my eyes. After 25 years of spending nothing on the mortgage you get a house worth lots, minus cgt and so on. In theory.

AnotherJoe

wildcardsa wrote: »

Unfortunately , it was my home, and then moved out to live with gf, and kept it as an investment, so not a business, just wanted to maintain "owning property".

Sigh, so best is probably just to pay it all, sell the house and not bother with SA after its sold and they take capital gains tax. (another thing)

Thanks to all for the advice...truly appreciated.

It IS a business, even if you don't think so. Hence such things as making sure you have the finances correctily organised.

It's very unlikely there will be any CGT because you can claim an exemption for IIRC the first 18 months after you've left, and there is also the CGT allowance, plus you can claim some of your expenses for selling.