Tax on rental

col81

Deleted thanks

caprikid1

Depends on so many things, what tax rate are you on ? IE 40% tax rate ? At those figures given likely interest rises I would be selling.

Pixie5740

col81 said:

I rent a property out on interest only it is £350 pcm and i receive £350 pcm. How much tax should i pay on this £350 i also inccur many costs keeping the property? I have just fitted new windows at £4000 for starters

Depends on the rest of your income and yes there are allowable expenses.

https://www.gov.uk/guidance/income-tax-when-you-rent-out-a-property-working-out-your-rental-income

Also depends with the new windows.  Why did you install new windows?  Are the new windows an improvement on the windows they replaced for example replacing single glazed windows with double glazing?

canaldumidi

https://www.gov.uk/guidance/income-tax-when-you-rent-out-a-property-working-out-your-rental-income

col81

20% tax payer 

saajan_12

col81 said:

I rent a property out on interest only it is £350 pcm and i receive £350 pcm. How much tax should i pay on this £350 i also inccur many costs keeping the property? I have just fitted new windows at £4000 for starters

Do you mean your financing costs are equal to your rental income? If so, this doesn't sound like a profitable business - property value can go up or down, there's other costs eg advertising, various certificates, repairs, etc etc. 

In terms of the tax, you may still have tax to pay as financing costs aren't deductible as expenses, but instead you get 20% tax relief (with some caveats). Need more info eg your overall other income and property expenses. 

col81

i was under the view that it is actually costing me oney so i would pay no tax. I think i am out of pocket on it by around £100 pcm let alone making money!

canaldumidi

col81 said:

i was under the view that it is actually costing me oney so i would pay no tax.

You are wrong. What made you think that?

Read the link provided (twice!)

col81

According to all calculators i should be paying £0

grumiofoundation

col81 said:

20% tax payer 

Are you still a 20% tax payer when the rental income is included. (4200 per year)

As said above the way it now works is you don't get tax relief on mortgage interest but instead you now get a tax-credit, based on 20% of your mortgage interest payments.

As said above certain expenses can be offset.

col81 said:

i was under the view that it is actually costing me oney so i would pay no tax. I think i am out of pocket on it by around £100 pcm let alone making money!

col81 said:

According to all calculators i should be paying £0

You probably won't have to pay any tax but the fact you aren't making money each month isn't the (inherent) reason why (if that makes sense). 


Sounds like  rubbish business if it is costing you money each month  - I would sell sharpish

What interest rate are you on? 

At 2% 350 pm is 210,000 which would surely mean a property value of over 250k.

350 per month seems very cheap. 

theartfullodger

Do I conclude correctly you pay £350/month on an interest only mortgage but only get £350/month rent, please?  (I have interest only mortgage on a rental property costing £232/month but rent is over £1,000.... Yes, Proudhon was right)

If so sounds like rent is rather cheap, way below market rate?

Please note HMRC may decide to tax you on market rent rather than which is received.  (Not obviously in your case, but I'm sure you can see the possible fiddle some rogue landlords use....)

Is tenant a relative and/or would they like to claim housing related benefits?

When was property 1st rented out by you please?