2nd property

Jen_75

I am a single working parent claiming tax credits, working and child. I own my own home and have overpayed my mortgage. I currently have less than 8 years left on my mortgage. I am able to pull the money back out of my mortgage without any costs apart from the obviously larger  monthly repayment. I am considering buying a student flat with the overpayment in the mortgage and a small loan. Instead of getting a BTL mortgage. I have looked at the new repayment cost on my mortgage and the rent on the flat would cover it. However if I would then lose my tax credits this is not an option. I have no idea where to go to get advice and fear I am over simplifying this as I dont have a clue what is involved in buying and renting. Any advice welcome, thanks.

NedS

Tax credits are based on your income, and capital assets are not taken into account, so the fact you may own a second property will not affect your tax credits.

However, Universal Credit is subject to capital/assets, and owning a second property would prevent you from claiming UC assuming you have capital of more than £16,000 (including the second property). So this may be a factor for you if you think you may need to claim UC in the future.

Caz3121

NedS said:

the fact you may own a second property will not affect your tax credits.

The tax credits information mentions rental income being "other income"
https://www.gov.uk/guidance/tax-credits-working-out-income

Property income

Include income from property in the UK that you own or rent. This could include:

• profit from renting or leasing out land and property (if your rental property made a loss, you can use working sheet TC825 to help you work out what to enter)