quick renting question for the experts

bonnerbob

I'm just about to rent my house out. I will receive £600 p/m on my house of which after my mortgage and management fee's £120 will be left. Will i need to keep any of that £120 for the tax man at the end of the year?? It's my sole property by the way if that makes any difference....i'm just away with work for the year.

thanks in advance guys!!!!

PasturesNew

I doubt the tax man will get close to getting his mitts on it.
By the time you've covered one month's void or a boiler breakdown or a plumbing problem that £120 and all the others will be spent.

You can claim some expenses from that £120. Once allowable expenses have been paid out, you will then have to pay tax on the remainder at your usual rate of tax/as per the usual income tax bandings.

You do all this on a bog standard tax return form.

sarahb

As far as I'm aware only the interest element of your mortgage payments is an allowable expense, so it's £120 plus the capital repayment element of your mortgage (if any) that you will need to be looking at.

tbs624

Helpful info on property rentals and tax can be found at http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnPropertyAndRentalIncome/DG_10014027

You need to keep accounts and declare your income and expenditure even if no tax will be due.

clutton_2

if you are going abroad i suggest you talk to the tax man before you go and ask their advice - as special rules apply to overseas resident landlords - also you do have to have a UK based manager for the property if you live abroad.

bonnerbob

O.k thanks everyone i got it. It's a intrest only mortgage.... so no i wont be having any capital taxed. So say for arguments sake i end up with £900 profit after all things like my interest only mortgage, management companies fee's etc. Then how much does the goverment take off the £900? is it 17.5%?

moneysavinmonkey

bonnerbob wrote: »

O.k thanks everyone i got it. It's a intrest only mortgage.... so no i wont be having any capital taxed. So say for arguments sake i end up with £900 profit after all things like my interest only mortgage, management companies fee's etc. Then how much does the goverment take off the £900? is it 17.5%?

no. it's classed as income so the tax depends on what rate your income is taxed at. I suggest you see an accountant as getting it wrong could be costly.

neverdespairgirl

bonnerbob wrote: »

O.k thanks everyone i got it. It's a intrest only mortgage.... so no i wont be having any capital taxed. So say for arguments sake i end up with £900 profit after all things like my interest only mortgage, management companies fee's etc. Then how much does the goverment take off the £900? is it 17.5%?

It depends on your tax rate. If you are a 40% taxpayer, for example, you will pay 40% of the profit.

clutton_2

for someone sooooo financially naive - i wonder whether going into BTL is the best option ?

bonnerbob

thanks for your concern clutton- circumstances have lead to this situation and actually just want to keep my property while i'm away on with work and want some one to pay my mortgage, but maybe your right... maybe i should leave all that complicated grown up stuff like this to fantastivally fervent money saving super fans like you....and shouldnt get above my station by trying to find out options open to me....

clutton_2

bonner - i am sorry if you took my post the wrong way - if you are going abroad, (or even a long way from your current property ) then you'd best put your property in teh hands of a good letting agent - as clearly, you have not done enough research to fully understand the complexities of BTL as a business - is that better ? I am not being sarcastic, but, i am being honest with you - your posts show that you dont yet have the knowledge to make a success of BTLing - if you are gong to do it - i strongly advise that you find a good agent and learn from them for a year, then - and only then - consider managing your property yourself.