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• FIRST POST
• lesterxburnham
• 30th Nov 17, 6:36 PM
• 56Posts
• 1Thanks
lesterxburnham
Hi,
I started renting my flat from 1st September 2017. Am I understanding it correctly that I have to register for self assessment before 30th September 2018?

Another question is whether I need to register at all if I charge £530 for rent out of which £520 is going into paying off the mortgage on that property?

Is there anything else I need to do as far as HMRC is concerned? Do I need to pay any additional insurance contributions or other tax? I am in full time employment and I'm renting based on consent to let (i.e. my mortgage is not buy to let) if that makes any difference.
Page 4
• getmore4less
• 3rd Dec 17, 3:16 PM
• 32,035 Posts
• 19,223 Thanks
getmore4less
rental profit after non finance costs and partially restricted mortgage interest = 1,925

tax payable 1,925 x 40% = 770
add back 25% balance of mortgage interest relief capped at 20%: (7*300= 2100 x 25% = 525. check if £525 is less than the property profits (1,925), yes it is, therefore use finance costs not deducted above in capped relief calculation: 525 x 20% = 105

net post tax profit in cash terms: 1,925 - tax (-770 + 105) = 1,260
Originally posted by 00ec25
the net cash after interest and expenses is (£530-£300)*7 - £210 = £1400

then remove the net tax £665

net post tax profit in cash terms £735.

very easy to forget to take off the 25% of interest not deducted in the net profit calculation for tax......
• 00ec25
• By 00ec25 3rd Dec 17, 3:32 PM
• 6,380 Posts
• 5,892 Thanks
00ec25
the net cash after interest and expenses is (£530-£300)*7 - £210 = £1400

then remove the net tax £665

net post tax profit in cash terms £735.

very easy to forget to take off the 25% of interest not deducted in the net profit calculation for tax......
Originally posted by getmore4less
indeed, even as i added the words "in cash terms" I knew they were wrong, but hey ho, someone always corrects mistakes, so I could not be bothered to edit it.
• lesterxburnham
• 4th Dec 17, 10:19 PM
• 56 Posts
• 1 Thanks
lesterxburnham
the economics of his situation do not make financial sense
Originally posted by 00ec25
can you elaborate more on why economics of my situation does not make sense please? I seriously would like to find out as in my eyes, I am getting someone else to pay off my mortgage. And I understand that I will have expenses/void periods etc but even then, I'll be paying off my own flat which once paid off, I can rent and have additional income from that (which is one of my plans for pension)
• Crashy Time
• 5th Dec 17, 2:16 PM
• 6,065 Posts
• 2,345 Thanks
Crashy Time
can you elaborate more on why economics of my situation does not make sense please? I seriously would like to find out as in my eyes, I am getting someone else to pay off my mortgage. And I understand that I will have expenses/void periods etc but even then, I'll be paying off my own flat which once paid off, I can rent and have additional income from that (which is one of my plans for pension)
Originally posted by lesterxburnham

How long will your mortgage last?
• ciderboy2009
• 5th Dec 17, 2:38 PM
• 407 Posts
• 368 Thanks
ciderboy2009
I'm surprised that nobody has asked how long your consent to let lasts with your mortgage provider?

Normally it's only a short term thing with the mortgage company wanting you to switch to a buy 2 let mortgage asap (higher interest rates so more profit for them - less for you).
• 00ec25
• By 00ec25 5th Dec 17, 6:46 PM
• 6,380 Posts
• 5,892 Thanks
00ec25
can you elaborate more on why economics of my situation does not make sense please?
Originally posted by lesterxburnham
simple, yes your mortgage is being partially paid off but:
a) not in full
b) you are not making an absolute profit that supplements your income in a meaningful manner whilst you are being taxed on income you don't actually get.
c) you have zero ability to absorb further interest rises
d) you are at risk of having to switch to an even more expensive mortgage product

you are basically playing at being a LL with the long term hope that you will not spend too much money in arriving at the final destination of having a property that was mostly paid for by someone else without it having cost you too much tax in the meantime when the rules change again
Last edited by 00ec25; 06-12-2017 at 4:59 PM.
• westernpromise
• 6th Dec 17, 1:05 PM
• 3,813 Posts
• 4,932 Thanks
westernpromise
simple, yes your mortgage is being partially paid off but:
a) not in full
b) you are not making an absolute profit that supplements your income in a meaningful manner whilst you are being taxed on income you don't actually get.
c) you have zero ability to absorb further interest rises
d) you are at risk of having to switch to an even more expensive mortgage product

you are basically playing at being a LL with the long term hope that you will not spend too much money in arriving at the final destination of having a property that was mostly paid for by someone else without it having cost you too much tax in the meantime when the rules change again
Originally posted by 00ec25
But apart from that it looks great!
Buying a house, if you believe the market has a way to fall, or if you are paying sill asking prices ( like some sheeple ) or if you are buying in London, is now a massive financial gamble!!!!! - June 8, 2012 by TheCountOfNowhere
• Crashy Time
• 6th Dec 17, 4:52 PM
• 6,065 Posts
• 2,345 Thanks
Crashy Time
• 00ec25
• By 00ec25 6th Dec 17, 5:02 PM
• 6,380 Posts
• 5,892 Thanks
00ec25
once again Crashy posts an unbalanced article written by a journalist who is probably a paid up member of Crashy's house price crash crew

should OP wish to understand the real impact of the tax change, then read the HMRC info
https://www.gov.uk/guidance/changes-to-tax-relief-for-residential-landlords-how-its-worked-out-including-case-studies
• Crashy Time
• 6th Dec 17, 10:17 PM
• 6,065 Posts
• 2,345 Thanks
Crashy Time
once again Crashy posts an unbalanced article written by a journalist who is probably a paid up member of Crashy's house price crash crew

should OP wish to understand the real impact of the tax change, then read the HMRC info
https://www.gov.uk/guidance/changes-to-tax-relief-for-residential-landlords-how-its-worked-out-including-case-studies
Originally posted by 00ec25

Or he could get the "unbalanced" free guide and read the HMRC one to compare the two?
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