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Letting a house/renting another/ costs/tax etc
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If I let my house out ( I dont have a mortgage) and then I rent another one with my partner - what expenses can I offset ? He will be letting his too so we would be renting a larger one together but the income we get for our two would be used for the rental cost of the new one.
ALSO what sort of tax does one have to pay for doing this?
Thanks
ALSO what sort of tax does one have to pay for doing this?
Thanks
Answers
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If you have rental income you have to pay income tax on it. The tax can be offset against any form of maitenance or repair on that property. If you put new windows in for example valed at �2500 you would not have to pay �2500 of tax accrued on that property. This offset against tax is deferred to future years. If you are going to rent out a property and do not want to pay tax on it keep doingthe house up new boiler, drive, fence, etc. If you had a mortgage you would be able to claim the tax back against the intrest on it.
Not sure if you can do the following but maybe worthwhile seeing if you could get your tennats to pay the rent / part rent for the property you would be renting together. If you can do this you would not be getting the income your landlord would. I would suggest that you pay a small fee to a tax / financial adviser who shold be able to give you the best advice, this is tax deductable. Can you let me know what they advise.
Not sure if you can do the following but maybe worthwhile seeing if you could get your tennats to pay the rent / part rent for the property you would be renting together. If you can do this you would not be getting the income your landlord would. I would suggest that you pay a small fee to a tax / financial adviser who shold be able to give you the best advice, this is tax deductable. Can you let me know what they advise.
There are also reprocussions when you come to sell the rented property. The taxman will give a value to the property when it was first rented and then revalue the property when the rental period has finished. Then when you eventually sell the property you will have to pay Capital Gains Tax on the amount they say that the property has increase in price by, this will go up with any work that is carried out on the house. Tax would be based on your current rate but would increase if the income / sale of the property takes you in to the next tax Threshold. If either of the sales take your income to over �35K you would have to pay tax at 40%.
As mentioned in my earlier reply I would recommend seeing an expert, choose carefully and make sure you find one who specialises in propety - some profess to but in my experience don't know as much as they make out. You should get what you pay for but you can offset the cost against your tax for the following year. It can be an expensive mistake if you get it wrong.
As mentioned in my earlier reply I would recommend seeing an expert, choose carefully and make sure you find one who specialises in propety - some profess to but in my experience don't know as much as they make out. You should get what you pay for but you can offset the cost against your tax for the following year. It can be an expensive mistake if you get it wrong.
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