Rent a room V Landlord Taxes

Hasbeen

Just saw thread re rent a room allows up to £7500 per year without any tax.

But landlords renting house pay tax if they get £7500 per year.


I am obviously missing something?


Thank you for any replies.

Brodiebobs

Rent a room is in your own house, so its not a 'business' as letting a house would be.

if a landlord didn't have another table income they could earn a lot more than £7,500 before earning tax I believe up to the lower earnings limit.

I think its just an incentive for people to let rooms in their own homes, obviously buying a house to let out is a commercial venture.

Hasbeen

Brodiebobs wrote: »

Rent a room is in your own house, so its not a 'business' as letting a house would be.

if a landlord didn't have another table income they could earn a lot more than £7,500 before earning tax I believe up to the lower earnings limit.

I think its just an incentive for people to let rooms in their own homes, obviously buying a house to let out is a commercial venture.

Thankyou for explanation. Was not thinking about lower earnings limit.

Pennywise

Hasbeen wrote: »

But landlords renting house pay tax if they get £7500 per year.

I am obviously missing something?

Yes, you're missing the allowable expenses that landlords claim, such as insurance, power, rates, repairs, mortgage interest, professional fees etc.

If you claim under rent a room relief, you can't claim any expenses.

trailingspouse

With rent-a-room (which only applies to live-in landlords with a single lodger), you can decide from year to year whether it's better to pay no tax (and not be able to deduct expenses), or whether you'd be better paying the tax but also being able to deduct (for example if you'd spent a lot on refurbishment).

00ec25

Hasbeen wrote: »

I am obviously missing something?

yes, it is a chalk and cheese comparison
- the property is your main home and you can choose to use the rent a room allowance

- the property is not your main home and you cannot choose