PROPERTY TAX

[lisab]

Hi Guys

I am about to let out my flat as I have bought a house (2nd mortgage) The rent that I will be receiving each month is under what I pay on the mortgage, I wil be topping up by approx £50 ech month. Will I still have to pay tax even though I am not making a profit?

Thanks

Lisa

[property man]

any rent you collect is unearned income and the tax must be paid on that minus any money you spent on maintaining the property.

[BAS]

You should be able to offset any interest paid against the income from your

property.

[plym77]

You must remember that you can only offset the 'interest paid' and not the capital element of a mortgage - if you have a repayment mortgage you are probably payinf an element of both, however there are various expenses you may pay which could be deductible - council tax, water, buldings/contents insurance, utilities, repairs, and possibly wear and tear allowance if you are letting the property furnished.

See the link for further guidance on renting a property:

http://www.hmrc.gov.uk/manuals/pimmanual/index.htm

You must also remember that you will have to prepare a self assessment tax return each year, declaring your rental income and expenses, together with other income you may receive, for example, employment etc.

Regards

Sherena Glanton CTA

(Plym 77)