tax help

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    tax help

    unable to sell my property so i am thinking about renting it out. can anyone work out how much tax i would have to pay please.
    rental income = 450
    interest only mortgage = 180
    house value 85000
    house is in joint names. income 22000 and 28000
    i understand things are tax deductible like repairs but for now just class them as zero.

    #2
    Briefly :

    Only the net profit for the Tax Year (6 April to 5 April) is taxable. Net profit is Income less allowable expenses. Your share is 50% and will be taxable at your highest rate of tax.

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      #3
      You would also be able to claim 10 per cent wear and tear if letting furnished and there are plenty of other things to offset against the tax, such as buildings insurance, mileage for visiting the property - viewings, inspections, maintenance issues.

      I wouldn't have thought your tax bill at the end of each year would amount to a great deal.

      Make sure you inform the HMRC as they will sting you with late penalties and fines.

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        #4
        It worries me that you can not work that out yourselt. However £324 each is the answer. Regards Peter

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          #5
          the maths was not the problem peter i just wasn't sure how it worked if it were in joint names but from your figures we obviously pay 10% each.
          thanks everyone

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            #6
            From the figures given in your first post,

            Originally posted by October4 View Post
            house is in joint names. income 22000 and 28000.
            You would pay 20% each. The rental income is added to your earned income.

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              #7
              Each of the joint owners would have to declare their share of the rental profit in their annual tax return.

              Jt Owner Share of Rental Income = 450 x 50% x 12 months = 2700

              Jt Owner Share of loan interest expenses = 180 x 50% x 12 months = 1080

              Rental Profit =2700 - 1080 = 1620

              Estimated Tax on 1620 at 20% = 324 ( to pay by each joint owner )

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                #8
                that makes perfect sense thank you. when i said 10% i just meant 10% each of the total profit or 20% each if you have already divided the profit 50/50.

                next thing would be tax deductible things like home insurance(200 pound) is this all tax deductible or just the vat on it. eg £200 or £40

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                  #9
                  Buildings insurance is a revenue deduction as are many other costs. I suggest you get a book on the subject and read up. Regards Peter

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                    #10
                    Originally posted by TaxationPete View Post
                    Buildings insurance is a revenue deduction as are many other costs. I suggest you get a book on the subject and read up. Regards Peter
                    I took that advice from another post and bought the tax café book, it covers everything you might need to know !!

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