Tax on a rented property
Discussion
This may sound like a dozy question, but if tax from a rented property is treated like income tax, does that mean you're entitled to the same personal allowance (£11,500 I believe), and it's whatever profit made above that amount that is taxable?
63 years old (not me), been a housewife all her life, gets a company pension via her husband who's passed away, and has 2 properties, 1 she lives in, and 1 she's renting out.
The basic maths is that you add it all up (pension and rent), whatever she makes above 11k is taxable at 20%?
63 years old (not me), been a housewife all her life, gets a company pension via her husband who's passed away, and has 2 properties, 1 she lives in, and 1 she's renting out.
The basic maths is that you add it all up (pension and rent), whatever she makes above 11k is taxable at 20%?
Edited by Leroy902 on Wednesday 25th May 06:56
A 63 years old (not me!), she's been a housewife all her life, gets a company pension via her husband who's passed away.
She has 2 properties, she lives in the first with her elderly mother-in-law that she takes care of, and rents out the second property, BUT the house she rents has her 2 sons and 1 daughter's names on the deeds as the owners, even though they have no part in any of the financing of the property.
The rent gets paid into her bank account.
How is the tax on property worked out?
Because she gets very little in pension, the total in rent and her pension totals lower than the £11.5 tax allowance, but do her kids, who as I mentioned haven't got any part in the financing of the property, in or out, have any baring on this?
She has 2 properties, she lives in the first with her elderly mother-in-law that she takes care of, and rents out the second property, BUT the house she rents has her 2 sons and 1 daughter's names on the deeds as the owners, even though they have no part in any of the financing of the property.
The rent gets paid into her bank account.
How is the tax on property worked out?
Because she gets very little in pension, the total in rent and her pension totals lower than the £11.5 tax allowance, but do her kids, who as I mentioned haven't got any part in the financing of the property, in or out, have any baring on this?
Edited by Leroy902 on Wednesday 25th May 07:54
Leroy902 said:
This may sound like a dozy question, but if tax from a rented property is treated like income tax, does that mean you're entitled to the same personal allowance (£11,500 I believe), and it's whatever profit made above that amount that is taxable?
63 years old (not me), been a housewife all her life, gets a company pension via her husband who's passed away, and has 2 properties, 1 she lives in, and 1 she's renting out.
The basic maths is that you add it all up (pension and rent), whatever she makes above 11k is taxable at 20%?
Simply, yes. However taxable rental income is rent less certain allowences63 years old (not me), been a housewife all her life, gets a company pension via her husband who's passed away, and has 2 properties, 1 she lives in, and 1 she's renting out.
The basic maths is that you add it all up (pension and rent), whatever she makes above 11k is taxable at 20%?
Edited by Leroy902 on Wednesday 25th May 06:56
i) Tax on rental income is not LIKE Income Tax, it IS Income Tax.
ii) a person gets ONE personal tax allowance each year for offset against ALL their personal income COMBINED.
So, if an individual had (say), self employed income of £30,000 and rental income of £10,000, their total income for the year would be £40,000. Before tax is calculated, they would deduct their personal allowances of £11,000 leaving them with taxable income of £29,000.
iii) the tax on taxable rental income is actually charged on "rental profits" i.e. the landlord is allowed deduct from the gross rents received from the tenant(s) allowable rental costs - such as property insurance, agent's fees, repairs and maintenance, accounting costs, rates or council tax costs paid by the landlord and, of course, mortgage interest.
From 6 April 2017 the tax relief available on mortgage interest and other financial charges will be restricted.
ii) a person gets ONE personal tax allowance each year for offset against ALL their personal income COMBINED.
So, if an individual had (say), self employed income of £30,000 and rental income of £10,000, their total income for the year would be £40,000. Before tax is calculated, they would deduct their personal allowances of £11,000 leaving them with taxable income of £29,000.
iii) the tax on taxable rental income is actually charged on "rental profits" i.e. the landlord is allowed deduct from the gross rents received from the tenant(s) allowable rental costs - such as property insurance, agent's fees, repairs and maintenance, accounting costs, rates or council tax costs paid by the landlord and, of course, mortgage interest.
From 6 April 2017 the tax relief available on mortgage interest and other financial charges will be restricted.
Leroy902 said:
rents out the second property, BUT the house she rents has her 2 sons and 1 daughter's names on the deeds as the owners, even though they have no part in any of the financing of the property.
The rent gets paid into her bank account.
Go and see a solicitor. This is all inside out and back to front even before you get to the Income Tax questions.The rent gets paid into her bank account.
I'm serious, do it soon.
Leroy902 said:
A 63 years old (not me!), she's been a housewife all her life, gets a company pension via her husband who's passed away.
She has 2 properties, she lives in the first with her elderly mother-in-law that she takes care of, and rents out the second property, BUT the house she rents has her 2 sons and 1 daughter's names on the deeds as the owners, even though they have no part in any of the financing of the property.
The rent gets paid into her bank account.
How is the tax on property worked out?
Because she gets very little in pension, the total in rent and her pension totals lower than the £11.5 tax allowance, but do her kids, who as I mentioned haven't got any part in the financing of the property, in or out, have any baring on this?
getting more complicated then the 1st post !She has 2 properties, she lives in the first with her elderly mother-in-law that she takes care of, and rents out the second property, BUT the house she rents has her 2 sons and 1 daughter's names on the deeds as the owners, even though they have no part in any of the financing of the property.
The rent gets paid into her bank account.
How is the tax on property worked out?
Because she gets very little in pension, the total in rent and her pension totals lower than the £11.5 tax allowance, but do her kids, who as I mentioned haven't got any part in the financing of the property, in or out, have any baring on this?
Edited by Leroy902 on Wednesday 25th May 07:54
So she does not have/own two properties then just one. But she gets paid money from her sons and daughters who do own the other property.
So do they gift it to her each month or does she really own it ? IHT etc Capital gains getting more complicated.
Gassing Station | Finance | Top of Page | What's New | My Stuff