2nd Property - Buying/Tax Advice please
Discussion
Me and the OH are thinking of either paying more into our current mortgage, or getting a place to rent out, since property is so cheap at the moment. A few queries though, if anyone can help...
How likely is it that you will be able to get a decent rate mortgage at the moment?
I presume you have to pay taxes on what you earn from renting the property out. If I rented it out for 500-550 a month, what would I pay in tax?
Any other advice...?
How likely is it that you will be able to get a decent rate mortgage at the moment?
I presume you have to pay taxes on what you earn from renting the property out. If I rented it out for 500-550 a month, what would I pay in tax?
Any other advice...?
You are liable to Income Tax on PROFITS generated from renting a property (not the full rent itself). So, there is no guarantee that you will have a tax bill arising.
The profit is arrived at by deducting allowanble rental costs against the gross rent. Rental Costs consist of -
mortgage INTEREST (not the full repayment)
repairs and maintenance costs
management charges
advertising costs incurred in seeking tenants
legal costs regarding tenancy issues (but not legal costs on the putchase or sale of the property or legal costs incurred when setting up the initial tenancy ageement)
accounting fees incurred in working out the rental profit or loss
Large scale building costs are not treated as allowable repairs. Instead, they are added on to the original cost of the property (as "Enhancement Expenditure") and claimed as a deduction when computing any Capital Gain at the time the property is evenntually sold.
If the property is jointly owned, profits and losses are spili equally between the two owners.
Profits are added on to the individual's overall income for the year and taxed accordingly. Losses can only be carried forward to future years for offset against future rental profits.
You are required to notify the Revenue that you will need to complete a Self Assessment tax return (as will any joint owners as well). Even if you are not making regular profits on the rental income, it is good to make the returns showing the losses as you are keeping the Revenue in the picture and will be building up the loss record with the Revenue for offset against future profits if and when they arrive.
The profit is arrived at by deducting allowanble rental costs against the gross rent. Rental Costs consist of -
mortgage INTEREST (not the full repayment)
repairs and maintenance costs
management charges
advertising costs incurred in seeking tenants
legal costs regarding tenancy issues (but not legal costs on the putchase or sale of the property or legal costs incurred when setting up the initial tenancy ageement)
accounting fees incurred in working out the rental profit or loss
Large scale building costs are not treated as allowable repairs. Instead, they are added on to the original cost of the property (as "Enhancement Expenditure") and claimed as a deduction when computing any Capital Gain at the time the property is evenntually sold.
If the property is jointly owned, profits and losses are spili equally between the two owners.
Profits are added on to the individual's overall income for the year and taxed accordingly. Losses can only be carried forward to future years for offset against future rental profits.
You are required to notify the Revenue that you will need to complete a Self Assessment tax return (as will any joint owners as well). Even if you are not making regular profits on the rental income, it is good to make the returns showing the losses as you are keeping the Revenue in the picture and will be building up the loss record with the Revenue for offset against future profits if and when they arrive.
Pulse said:
Me and the OH are thinking of either paying more into our current mortgage, or getting a place to rent out, since property is so cheap at the moment. A few queries though, if anyone can help...
How likely is it that you will be able to get a decent rate mortgage at the moment?
I presume you have to pay taxes on what you earn from renting the property out. If I rented it out for 500-550 a month, what would I pay in tax?
Any other advice...?
Define decent as a rate on your mortgage?How likely is it that you will be able to get a decent rate mortgage at the moment?
I presume you have to pay taxes on what you earn from renting the property out. If I rented it out for 500-550 a month, what would I pay in tax?
Any other advice...?
BTL rates are improving,but they are a bit off residential rates.
BTL FEES stink.
What LTV are you looking at? Anyhting over 75% forget it, the deals arent there.
How mcuh would you need to borrow.
PM me if you like and I'll run through the deals with you, what you need to know and do from a borrowing perspective.
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