Renting out own home to rent another?
Discussion
Advice required for my brother who curently owns a home in London and has a mortgage. Work is taking him up north to Manchester for at least 3 years. He is considering renting his own home out down in London as he does not want to sell it and he is also tied in to a mortgage for another 5 years (recently remortgaged at a good rate). He has been told by the mortgage company this is possible via a consent to lease arrangement as they will add 1% to his current interest rates.
Say he rents outs the London home for £1200 and his mortage payments are £1200 too there is no profit made and he breaks even - the rent pays his mortgage but any upkeep or maintainece will be his problem but in no way is he making a profit on this letting.
Does he still need to pay tax on this rental income and if ao how much?
His place he will rent in Manchester will cost £950 a month.
He is letting his only residential property and is not a buy to let investor so in this case what are his tax liabilities tomrent his own home For three years? Thanks
Say he rents outs the London home for £1200 and his mortage payments are £1200 too there is no profit made and he breaks even - the rent pays his mortgage but any upkeep or maintainece will be his problem but in no way is he making a profit on this letting.
Does he still need to pay tax on this rental income and if ao how much?
His place he will rent in Manchester will cost £950 a month.
He is letting his only residential property and is not a buy to let investor so in this case what are his tax liabilities tomrent his own home For three years? Thanks
Eric Mc said:
How much of the £1,200 repayment is interest and how much is Capital Repayment?
Under current rules, the INTEREST element of the repayment is an allowable cost when calculating the annual profit or loss on the rental property.
The allowabillity of interest against rental income is being restricted from tax year 2016/17 onwards. This means that over the next five years, a landlord's tax liability on his rental profits will increase as the interest claim becomes less and less available for offset.
Guess it will be 51% Capital and 49% Interest. Under current rules, the INTEREST element of the repayment is an allowable cost when calculating the annual profit or loss on the rental property.
The allowabillity of interest against rental income is being restricted from tax year 2016/17 onwards. This means that over the next five years, a landlord's tax liability on his rental profits will increase as the interest claim becomes less and less available for offset.
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