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Renting House Out And Tax Bill

pbsmiles
pbsmiles Posts: 102 Forumite
in House buying, renting & selling
Hello
My partner started renting a house out which is has a buy to let mortgage on, can anyone advise how this works with regard to paying tax on the earnings? The rent is more or less the mortgage.

Thank you
«1

Comments

  • Comms69
    Comms69 Posts: 14,229 Forumite
    10,000 Posts Third Anniversary Name Dropper
    Declare income, deduct any allowable expenses (this is shortly to change to no longer allow mortgage interest I believe)
  • pbsmiles
    pbsmiles Posts: 102 Forumite
    Comms69 wrote: »
    Declare income, deduct any allowable expenses (this is shortly to change to no longer allow mortgage interest I believe)

    When you say declare income, what would be classed as the income the whole monthly rent or the rent less the mortgage and estate agents fees?
  • tiz
    tiz Posts: 107 Forumite
    Only the mortgage interest counts, not the whole payment if it's a repayment mortgage.
  • Pixie5740
    Pixie5740 Posts: 14,515 Forumite
    10,000 Posts Eighth Anniversary Name Dropper Photogenic
    The capital repayment of the mortgage is not an allowable expense.
  • pbsmiles
    pbsmiles Posts: 102 Forumite
    tiz wrote: »
    Only the mortgage interest counts, not the whole payment if it's a repayment mortgage.

    I don't quite understand.

    The rent is 450
    The mortgage is 370
    The letting agent fee is say 40

    sorry to sound silly its just very new to us.
  • ProDave
    ProDave Posts: 3,785 Forumite
    Seventh Anniversary 1,000 Posts Name Dropper Combo Breaker
    edited 2 October 2017 at 2:02PM
    So monthly income is £450 (This is your turnover)
    Monthly expenses are £370+40 *

    There will be other expenses such as insurance, maintenance and repairs etc, so chances are your profit will be tiny, or even a loss (particularly if there is a void period)

    It still has to be declared even if there is no profit, on the Land and Property section of your tax return.

    * You are only allowed to deduct the mortgage INTEREST, so if that £370 is your total monthly payment, your interest will be a lot less. See your mortgage statement for what the interest is each month or year, that is the amount you are allowed to deduct as an expense.
  • bris
    bris Posts: 10,548 Forumite
    Part of the Furniture 10,000 Posts Name Dropper
    Interest only mortgages are very hard to get now so I suspect the whole 370 is not interest. Only the interest within the 370 is tax deductible. You will get a yearly statement that tell you the yearly interest you pay. The rest is classed as profit for tax reasons.
  • Comms69
    Comms69 Posts: 14,229 Forumite
    10,000 Posts Third Anniversary Name Dropper
    pbsmiles wrote: »
    When you say declare income, what would be classed as the income the whole monthly rent or the rent less the mortgage and estate agents fees?



    You Declare the full amount received and then deduct the relevant expenses.


    income, not profit.
  • Crashy_Time
    Crashy_Time Posts: 13,386 Forumite
    10,000 Posts Seventh Anniversary Name Dropper
    http://www.telegraph.co.uk/investing/buy-to-let/buy-to-let-tax-changes-will-cost-20k-year-this-going-do/
  • kingstreet
    kingstreet Posts: 39,349 Forumite
    Part of the Furniture 10,000 Posts Name Dropper Photogenic
    bris wrote: »
    Interest only mortgages are very hard to get now so I suspect the whole 370 is not interest. Only the interest within the 370 is tax deductible. You will get a yearly statement that tell you the yearly interest you pay. The rest is classed as profit for tax reasons.
    Interest Only is still widely available on BTL products.
    I am a mortgage broker. You should note that this site doesn't check my status as a Mortgage Adviser, so you need to take my word for it. This signature is here as I follow MSE's Mortgage Adviser Code of Conduct. Any posts on here are for information and discussion purposes only and shouldn't be seen as financial advice. Please do not send PMs asking for one-to-one-advice, or representation.
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