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Tax from renting when most of rent goes into paying off mortgage
Comments
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indeed, even as i added the words "in cash terms" I knew they were wrong, but hey ho, someone always corrects mistakes, so I could not be bothered to edit it.getmore4less wrote: »the net cash after interest and expenses is (£530-£300)*7 - £210 = £1400
then remove the net tax £665
net post tax profit in cash terms £735.
very easy to forget to take off the 25% of interest not deducted in the net profit calculation for tax......0 -
the economics of his situation do not make financial sense
can you elaborate more on why economics of my situation does not make sense please? I seriously would like to find out as in my eyes, I am getting someone else to pay off my mortgage. And I understand that I will have expenses/void periods etc but even then, I'll be paying off my own flat which once paid off, I can rent and have additional income from that (which is one of my plans for pension)0 -
lesterxburnham wrote: »can you elaborate more on why economics of my situation does not make sense please? I seriously would like to find out as in my eyes, I am getting someone else to pay off my mortgage. And I understand that I will have expenses/void periods etc but even then, I'll be paying off my own flat which once paid off, I can rent and have additional income from that (which is one of my plans for pension)
How long will your mortgage last?0 -
I'm surprised that nobody has asked how long your consent to let lasts with your mortgage provider?
Normally it's only a short term thing with the mortgage company wanting you to switch to a buy 2 let mortgage asap (higher interest rates so more profit for them - less for you).0 -
simple, yes your mortgage is being partially paid off but:lesterxburnham wrote: »can you elaborate more on why economics of my situation does not make sense please?
a) not in full
b) you are not making an absolute profit that supplements your income in a meaningful manner whilst you are being taxed on income you don't actually get.
c) you have zero ability to absorb further interest rises
d) you are at risk of having to switch to an even more expensive mortgage product
you are basically playing at being a LL with the long term hope that you will not spend too much money in arriving at the final destination of having a property that was mostly paid for by someone else without it having cost you too much tax in the meantime when the rules change again0 -
simple, yes your mortgage is being partially paid off but:
a) not in full
b) you are not making an absolute profit that supplements your income in a meaningful manner whilst you are being taxed on income you don't actually get.
c) you have zero ability to absorb further interest rises
d) you are at risk of having to switch to an even more expensive mortgage product
you are basically playing at being a LL with the long term hope that you will not spend too much money in arriving at the final destination of having a property that was mostly paid for by someone else without it having cost you too much tax in the meantime when the rules change again
But apart from that it looks great!0 -
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once again Crashy posts an unbalanced article written by a journalist who is probably a paid up member of Crashy's house price crash crewCrashy_Time wrote: »
should OP wish to understand the real impact of the tax change, then read the HMRC info
https://www.gov.uk/guidance/changes-to-tax-relief-for-residential-landlords-how-its-worked-out-including-case-studies0 -
once again Crashy posts an unbalanced article written by a journalist who is probably a paid up member of Crashy's house price crash crew
should OP wish to understand the real impact of the tax change, then read the HMRC info
https://www.gov.uk/guidance/changes-to-tax-relief-for-residential-landlords-how-its-worked-out-including-case-studies
Or he could get the "unbalanced" free guide and read the HMRC one to compare the two?0
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