Expenses OUTSIDE the rent a room scheme

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    Expenses OUTSIDE the rent a room scheme

    Hello everyone

    My name is David, I am a yet to be Landlord (read I am looking to buy a property and thinking about renting one or two rooms).

    My question is pretty straightforward but can't seem to find and answer.

    Under the Rent-A-Room scheme you have an allowance of £4250, free of taxes, but can not claim any expense.

    But how do you calculate expenses when you opt-out of the scheme? Do all the expenses/allowance of a normale rental still hold valid? Surely not for the whole amount I guess (would be too cool to be true).

    On a side note: I am also considering to just buy to let, but I am worried of tenants not paying rent, which would be a disaster considering I am taking on a meaty mortgage! I know is a silly question but does it happen often if you do the proper checks (or maybe rely on an agency doing the screening of the tenants?).

    #2
    Just a reasonable proportion. So, mortgage £100 per month. House has 4 bedrooms, kitchen and lounge, so 6 rooms. 2 bedrooms occupied by lodgers. Therefore 2/6th of mortgage is tax deductible.

    Comment


      #3
      Sounds good!
      Let me see if I understood correctly with and example closer to what I expect to be the situation.

      Flat with 1 Kitchen, 1 living room, 2 bedrooms (3 total rooms + kitchen). mortgage interests £500 (I wish!), council and service charge £100 (more realistic).

      Case A - 1 Lodger: 1 room each, shared use of kitchen and living room. I file as expenses 50% of mortgage interests, council tax and service charge (£300). Correct?

      Case B - 2 Lodgers: 2 rooms to lodgers plus shared use of kitchen. I can file 66% of the expenses (2 rooms out of 4 rooms, plus 2/3 of the kitchen) (£396 total). Correct?

      Comment


        #4
        Originally posted by Telometer View Post
        Just a reasonable proportion. So, mortgage £100 per month. House has 4 bedrooms, kitchen and lounge, so 6 rooms. 2 bedrooms occupied by lodgers. Therefore 2/6th of mortgage is tax deductible.
        Try reading what I wrote.

        Comment


          #5
          I tried. But doesn't help me understanding what my situation will be and doesn't point to a specific law.

          In your example you consider kitchen and loung as room but not bathroom, what if I rent the loung too? You also mention mortgage interest only, what other expenses can I deduct (I imagine all other expenses would be deductible, just a different portion compared to the let of the whole flat)?

          Comment


            #6
            The law is that expenditure must be wholly and exclusively for the purposes of the business for it to be deductible.

            Comment


              #7
              Flat with 1 Kitchen, 1 living room, 2 bedrooms. If you rent out both bedrooms as per Case B, where do you live. I'm confused. Regards Peter

              Comment


                #8
                Hi, in case B I would rent the living room as a bedroom (very common here in London).

                Comment

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