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Tax questions for a newbie.


sidthekid

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Hello everyone,

I just wanted to ask a few simple tax questions to see if it is worth me becoming a landlord or not.

Me and my girlfriend have brought a flat together which is in both our names and what we want to do is rent out our flat and then buy a house using the profit to help pay the house mortgage. The flat will be remortgaged as BTL and paying of the interest only and we hope to get after all the fees etc. to make between 400 and 500 a month.

1. do we pay tax on just the profit we make after all the fees are deducted and can we claim anything back ie. like wear and tear and agents fees and maintenance charges?

2. I know I will have to get an accountant to sort out the tax but does my work need to get involved ie. tax codes changing etc. The woman at work who does the wages makes a mountain out of a mole hill and I don't want her to get involved in anyway, especially as she is the bosses wife.

3. If we get married in the future and my wife gives up work to have kids can I put the rent payed in her name so we don't pay tax on it?

Thanks for all answers in advance

What I really want is to use the flat as my pension, if there are any tips on how to best achieve this I would be very much appreciate it.

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I just wanted to ask a few simple tax questions to see if it is worth me becoming a landlord or not.

Tax questions are never simple or straightforward.

Me and my girlfriend have brought a flat together which is in both our names and what we want to do is rent out our flat and then buy a house using the profit to help pay the house mortgage.

There is unlikely to be much profit after expenses.

The flat will be remortgaged as BTL and paying of the interest only and we hope to get after all the fees etc. to make between 400 and 500 a month.

Have you taken into account all the likely expenses in arriving at your £400 - £500 pcm figure ?.....e.g......Letting agents, insurances, deposit protection, ground rent, service charges, mortgage, inventory costs, electrical & gas checks, repairs, maintenance, replacement contents, decorating provision, bad debt provision, utilities during voids, accountant, taxes etc etc.

1. do we pay tax on just the profit we make after all the fees are deducted

yes

and can we claim anything back ie. like wear and tear and agents fees and maintenance charges?

you can offset expenses.

2. I know I will have to get an accountant to sort out the tax

You don't have to, its not compulsory.

but does my work need to get involved ie. tax codes changing etc.

no

3. If we get married in the future and my wife gives up work to have kids can I put the rent payed in her name so we don't pay tax on it?

yes

If you decide to go ahead, my advice would be....

1. Get an accountant at least for the first year.

2. Get a copy of Carl Bayley's book ' How to Avoid Property Tax'.....costs about £25 (tax deductable expense if you proceed).

3. Read it at least twice.

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From similar question I posted a while ago I think Richlist answer 3 is a No unless the deed of ownership is changed to the non-taxpayer only. The proportion of tax on property income needs to reflect the proportion of ownership as specified in the deed, normally 50/50 if two joint owners.

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If the lady acts as the manager for the letting and charges 'the business' for the service the effect could be that she pays 'any' tax on her personal profit.

This way the op shouldn't enjoy any profit.

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The beneficial ownership can be changed by putting in place a 'Declaration of Trust' that apportions the 'beneficial ownership'. This can be 99 to 1 and then completing Form 17 and sending it to HMRC within 60days.

If you don't have this in place the HMRC default is 50:50

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It seems HMRC need to check their answers as surely they were wrong to mark this one as incorrect.

The Importance of Tax Return Accuracy | LandlordReferencing.co.uk

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