How much income tax would I be paying on £950 per month rental income?

pramsay13

You seem to want your tenants to pay off your mortgage for you 

If you switch to interest only it will probably make more sense although with your circumstances it might be better selling and saving the money, and buying again when required. 

sheramber

IAMIAM said:

propertyrental said:

Recent changes in tax law are certainly giving many LLs 2nd thoughts, and yes, some are selling up.

So at what point does it become worth while for me and others!!

When you rental income is more than you outgoings,  leaving an profit  that you consider worthwhile.

What is worthwhile to one person may not be worthwhile to another.

Richard1212

I've never really liked the whole concept of BTL ----I can think of many better ways of increasing my income without taking out a mortgage. However, they have become popular in past years with mortgage rates so low. But they are not a good way to increase your income at the present or in the medium term. I own a number of houses and flats, and the income I earn from them in rent is very significant . But a single BTL with a mortgage is something I would not do, and especially in the present climate and given your own circumstances---for all the reasons already outlined by posters on this thread. 

Mstty

IAMIAM said:

@Mstty but even if it were mortgage free and you earned £55k, in theory you would be paying largely the same amount of tax....

If the figures don't work because you have had to borrow too much on your BTL or you have to fix now at 5%+ then you have to do what every other business person does and assess your situation and options.

Are you including the repayment part of the BTL in your calculations. If so that's really you investing back rent into the equity.

prowla

IAMIAM said:

I have just used this website link and cannot believe where the profit actually now comes from when renting your property out!!

I am effectively going to be paying half the mortgage myself as I would end up paying nearly half of my rental income to the taxman!!! 

Is this why everyone (ie BTL landlords are selling up!)

https://taxscouts.com/calculator/rental-income-tax/

I think the profit is that someone else is paying half of the mortgage.

theartfullodger

You'll be aware there are more than 10 taxes a landlord may pay.  Just worrying about income tax a bad idea   Buy a book on property tax - it will almost certainly save more time and money that it takes to buy & read.

Don't play if you don't have the financial AND EMOTIONAL reserves to cope with the tenant-from-hell (or agent likewise)

gazfocus

As Prowla said, the "profit" is in the tenants paying the mortgage for many landlords. A lot of landlords also look at BTL as a long term game so as long as the rent covers your mortgage payments and tax/other costs, then the profit is in the future value of the property. 

Out of interest, is there anything preventing you from getting a BTL mortgage now rather than waiting a couple of years?

 

MEM62

IAMIAM said:

propertyrental said:

Recent changes in tax law are certainly giving many LLs 2nd thoughts, and yes, some are selling up.

So at what point does it become worth while for me and others!!

In many cases, it doesn't.  That boat has sailed for many.    

IAMIAM said:

@Mstty but even if it were mortgage free and you earned £55k, in theory you would be paying largely the same amount of tax....

Yes, but that is no surprise. BTL's are not tax efficient and haven't been for many years.  

IAMIAM

It's just trying to manage staying on the property ladder, moving closer to work without the funds and knowing the areas just yet before committing to moving area straight away and to pay all the excess tax on a consent to let! 
Any help with that idea appreciated. 

SiliconChip

IAMIAM said:

It's just trying to manage staying on the property ladder, moving closer to work without the funds and knowing the areas just yet before committing to moving area straight away and to pay all the excess tax on a consent to let! 
Any help with that idea appreciated. 

Sell, put the money in the bank at the highest interest rate applicable to when you'll need the money again, and rent in the new area while you decide where and what to buy. With higher interest rates and house prices falling in some areas you may even find yourself coming out ahead on the deal.