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johnnywgk

Original Poster:

1,930 posts

62 months

[news] 
Wednesday 30th March 2011 quote quote all
Hi all.

How much can you rent your house for, before having to pay tax
on the income.

I've heard it's £90, but would like to get this confirmed.

Many thanks.

Eric Mc

74,213 posts

145 months

[news] 
Wednesday 30th March 2011 quote quote all
If you make a profit on renting the house, you pay tax on that profit. There are no magic "de minimis" amounts.

GT03ROB

3,005 posts

101 months

[news] 
Wednesday 30th March 2011 quote quote all
Are you confusing renting the house with the rent-a-room scheme, where I think up to £400 / month does not eed to be declared??

Eric Mc

74,213 posts

145 months

[news] 
Wednesday 30th March 2011 quote quote all
"Rent a Room" is not "Rent a House".

johnnywgk

Original Poster:

1,930 posts

62 months

[news] 
Wednesday 30th March 2011 quote quote all
Ah, i think this is classed as a room, i have the whole 2 bed house, but
only use of 1 room, as other room is padlocked with landlords belongings in.

Hope this is more use to you.

Many thanks, so far.
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Eric Mc

74,213 posts

145 months

[news] 
Wednesday 30th March 2011 quote quote all
Rent a Room scheme is for situations where a home owner has a lodger. For a landlord to be able to claim rent a room relief, the landlord MUST be living in the same house as the lodger.

If the landlord has a second house which he rents out, then he is liable to Income Tax on the profits he makes frrom renting that second property - no matter how small those profits may be.

johnnywgk

Original Poster:

1,930 posts

62 months

[news] 
Wednesday 30th March 2011 quote quote all
Cheers Eric, i know i'm being thick, but what if the landlords mortgage is more than the rent he gets.

Cheers for being patient with me.

Eric Mc

74,213 posts

145 months

[news] 
Wednesday 30th March 2011 quote quote all
johnnywgk said:
Cheers Eric, i know i'm being thick, but what if the landlords mortgage is more than the rent he gets.

Cheers for being patient with me.
A lsndlord can offset the mortgage INTEREST on the loan taken out to buy the rental property against the income from that rental property.
Therefore, they cannot offset the actual full loan REPAYMENT - only the element of the monthly repayments that relates to interest.

Of course, if the mortgage is an "interest only" mortgage, then the monthly amounts are all interest and are fully allowable.

Landlords can offset lots of other costs against the rental income too - such as repairs and maintenance costs, insurances, agents fees, managment charges etc etc.

johnnywgk

Original Poster:

1,930 posts

62 months

[news] 
Wednesday 30th March 2011 quote quote all
Think that's answered my question.

Thanks for your time smile

Eric Mc

74,213 posts

145 months

[news] 
Wednesday 30th March 2011 quote quote all
If someone has started renting out a property they need to notify HMRC pretty quickly as HMRC will want to issue a Self Assessment tax return to the individual. Even if the property turns in a rental loss, the tax return still needs to be completed.

There could also be Capital Gains Tax issues if and when the property is disposed of.

splodge s4

1,385 posts

117 months

[news] 
Wednesday 30th March 2011 quote quote all
Eric Mc said:
There could also be Capital Gains Tax issues if and when the property is disposed of.
If someone decided to let out their current main res & they move to another property, is there a period of time that he could sell the now let property & not pay cap gains? Did it used to be, or still is 3 years? Im a bit rusty on this now!

princeperch

4,724 posts

127 months

[news] 
Wednesday 30th March 2011 quote quote all
Eric Mc said:
If someone has started renting out a property they need to notify HMRC pretty quickly as HMRC will want to issue a Self Assessment tax return to the individual. Even if the property turns in a rental loss, the tax return still needs to be completed.

There could also be Capital Gains Tax issues if and when the property is disposed of.
My friend is doing this on a property is has purchased and immediately let out(against my advice) and isnt paying tax on his rental income.

What are his chances of getting caught in your experience? The funny thing is that he also has a council tenant in the property so I was wondering if they would ask for evidence that he is paying whats due..

johnnywgk

Original Poster:

1,930 posts

62 months

[news] 
Wednesday 30th March 2011 quote quote all
Long story short. I need to sign on, 1st time for years, i'm the tennant.

I just find it soooo hard, playing the sign on game, not got the experience
that some have, so wanted to know what to tell them, before they tear me to shreads, and give me nothing.

Eric Mc

74,213 posts

145 months

[news] 
Wednesday 30th March 2011 quote quote all
splodge s4 said:
Eric Mc said:
There could also be Capital Gains Tax issues if and when the property is disposed of.
If someone decided to let out their current main res & they move to another property, is there a period of time that he could sell the now let property & not pay cap gains? Did it used to be, or still is 3 years? Im a bit rusty on this now!
The three year rule still applies (ask any MP).

Eric Mc

74,213 posts

145 months

[news] 
Wednesday 30th March 2011 quote quote all
princeperch said:
Eric Mc said:
If someone has started renting out a property they need to notify HMRC pretty quickly as HMRC will want to issue a Self Assessment tax return to the individual. Even if the property turns in a rental loss, the tax return still needs to be completed.

There could also be Capital Gains Tax issues if and when the property is disposed of.
My friend is doing this on a property is has purchased and immediately let out(against my advice) and isnt paying tax on his rental income.

What are his chances of getting caught in your experience? The funny thing is that he also has a council tenant in the property so I was wondering if they would ask for evidence that he is paying whats due..
Depending on their circumstances, they may not actually have any tax liability arising. This would be the case if they were making an annual loss on the letting of the proiperty. Obviously, if they are making a profit they should be paying the Income Tax arising on that anual profit.

If the latter is the case, they are breaking the law.

The chances of geting caught are relatively high when it comes to property letting in that HMRC can tie residential up addresses with land registry details - or they could be shopped by a disgruntled tenant.

splodge s4

1,385 posts

117 months

[news] 
Thursday 31st March 2011 quote quote all
Eric Mc said:
The three year rule still applies (ask any MP).
hehe good point, thank you! thumbup


Wings

4,327 posts

95 months

[news] 
Thursday 31st March 2011 quote quote all
Eric Mc said:
Depending on their circumstances, they may not actually have any tax liability arising. This would be the case if they were making an annual loss on the letting of the proiperty. Obviously, if they are making a profit they should be paying the Income Tax arising on that anual profit.

If the latter is the case, they are breaking the law.

The chances of geting caught are relatively high when it comes to property letting in that HMRC can tie residential up addresses with land registry details - or they could be shopped by a disgruntled tenant.
Recent legislations including the Deposit Protection Scheme, HMO planning legislation etc. etc. Together with the government’s data collection agency, with their computers linked up to local council’s offices, DHSS, NHS, UKBA, Police, HMR&C etc. etc.

AAT1981

380 posts

71 months

[news] 
Friday 1st April 2011 quote quote all
[quote=Eric Mc]

A lsndlord can offset the mortgage INTEREST on the loan taken out to buy the rental property against the income from that rental property.
Therefore, they cannot offset the actual full loan REPAYMENT - only the element of the monthly repayments that relates to interest.

Of course, if the mortgage is an "interest only" mortgage, then the monthly amounts are all interest and are fully allowable.

Landlords can offset lots of other costs against the rental income too - such as repairs and maintenance costs, insurances, agents fees, managment charges etc etc.[/quote

Q for Eric Mc

I have a house that I rent out, the mortgage is covered by the two tenants, howver the total monthly cost including insurance does not cover the mortgage, its not much (around £20 a month), do I need to delcare this income?

Eric Mc

74,213 posts

145 months

[news] 
Friday 1st April 2011 quote quote all
Yes.

Wings

4,327 posts

95 months

[news] 
Friday 1st April 2011 quote quote all
AAT1981]ric Mc said:
A lsndlord can offset the mortgage INTEREST on the loan taken out to buy the rental property against the income from that rental property.
Therefore, they cannot offset the actual full loan REPAYMENT - only the element of the monthly repayments that relates to interest.

Of course, if the mortgage is an "interest only" mortgage, then the monthly amounts are all interest and are fully allowable.

Landlords can offset lots of other costs against the rental income too - such as repairs and maintenance costs, insurances, agents fees, managment charges etc etc.[/quote

Q for Eric Mc

I have a house that I rent out, the mortgage is covered by the two tenants, howver the total monthly cost including insurance does not cover the mortgage, its not much (around £20 a month), do I need to delcare this income?
Also if the rented property is furnished, then the landlord can also claim an allowance each year equivalent to 10% of the gross rent.


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