Renting

scott0810

Hi I’m looking to rent my house to my friend until the end of my mortgage deal ( will be swapping to buy to let)  Looking to charge same amount as my mortgage. Question is will I have to pay tax etc on this as I won’t be making any money. 

DullGreyGuy

Presumably you are on a repayment mortgage? You cannot offset repayment of the capital against rental income and so you will be making a profit. What tax you will have to pay will depend on what other monies you have coming in.

silvercar

You will be making a loss by the time you have paid for landlord insurance, gas safety certificate etc

ArbitraryRandom

I'm not sure why you think you won't be making any money if you will have the money to pay off your mortgage...? You choosing to spend this money to pay your mortgage is no different from you choosing to use your salary to pay. 

You can deduct certain costs, but mortgage repayments are not one of those costs (what you can deduct can be complicated depending on where you are in the country, so I would recommend speaking to an accountant or joining the NRLA and taking part in one of their courses for new landlords; Happily both of those costs can be tax deductible). 

And it's worth emphasising again that your friend will still legally be your tenant and therefore have the same rights and you the same responsibilities as if they were a stranger to you; so there will be costs you will have to pay that you might not have chosen to pay if you were an owner occupier.  

sourpuss2021

Put it on OpenRent and get the maximum £££ the market will offer.  Never rent to a friend unless you want to lose that friend.

MultiFuelBurner

Some might say if you value the friendship you should do all this properly. Tenancy agreement, deposit and inspections. 

I would charge more than the mortgage and keep this in a separate back account. When everything is good at the end of the tenancy/mortgage/friend moves out share the money if you want (after taxes)

theartfullodger

You will be liable to pay tax on all the rent.  If rented at a low rent (or pretending to) HMRC have the right to assess you at market rent.  They ain't stupid and have a pile of big computer systems. 

Done ANY training in how to be a landlord and/or in landlord/tenant law please?

Which country.

london21

Aviod business with family and friends.

scott0810

Thank you all. 

Just trying to get my head around it all so I may have to do the course but until then for example if I charged £700 would I be taxed on £8400 at the end of the year or will things get deducted before then? 

ArbitraryRandom

scott0810 said:

Thank you all. 

Just trying to get my head around it all so I may have to do the course but until then for example if I charged £700 would I be taxed on £8400 at the end of the year or will things get deducted before then? 

It wouldn't be 'deducted' - you would have to complete a self assessment tax return each year to declare the income in full and any allowable expenses you were claiming.  

If it and your income from other sources would make you a higher rate tax payer, then it's definitely worth having a conversation with an accountant before proceeding. 

tripled

You will get taxed on the income. Some expenses may be claimed back, although mortgage interest isn't one of them. You may also become liable for capital gains when you sell the property. You will need to get consent to let from your mortgage company, and will have a number of other expenses such as landlord's gas safety certificate and electrical safety check, and will have a various legal obligations, and risks, as a landlord.