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.

    Comment


      #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.

      Comment


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

        Comment


          #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

          Comment


            #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.

            Comment


              #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 )

              Comment


                #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

                Comment


                  #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

                  Comment


                    #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 !!

                    Comment

                    Latest Activity

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                    • Reply to Caught out by changes to Capital Gains Tax
                      by reluctantlandlord1976
                      Thank you Gordon, didn't see your response this afternoon. I will look at this with fresh eyes tomorrow as it's late now.
                      I've put some figures in my reply to a post just now but answers below to your questions.

                      a] £80k Jan 2021 sale price.
                      b] As property purchased before...
                      08-12-2021, 00:55 AM
                    • Caught out by changes to Capital Gains Tax
                      by reluctantlandlord1976
                      I appreciate 'ignorance' is no excuse, however there are some mitigating factors, i.e. due to illness etc.

                      1. Previous family home rented out - terrible tenants - left owing rent, bad repairs etc. [usual story for some] subsequently property not let for 2 years for a number of reasons while...
                      06-12-2021, 13:51 PM
                    • Reply to Caught out by changes to Capital Gains Tax
                      by reluctantlandlord1976
                      Andrew, apologies only just seen your post [was it awaiting approval did you say?] answers are:

                      Purchased March 1982 as joint tenancy - so equal split of 33 1/3% each party
                      Parent 2 died September 2007 - as joint tenancy I inherited their share - so at this point I own 100% of property...
                      08-12-2021, 00:41 AM
                    • Reply to Caught out by changes to Capital Gains Tax
                      by reluctantlandlord1976
                      JP Keates
                      I wasn't aware that refurbishment deductions only applied in terms of letting out the property. On the CGT calculator it asked 'How much have you spent on improvements since you became the property owner'.....

                      Here's the timeline:

                      March 1982 - 1992 3 Owners,...
                      07-12-2021, 18:01 PM
                    • Reply to Caught out by changes to Capital Gains Tax
                      by reluctantlandlord1976
                      JP Keates et al - thank you very much for your assistance. I have this afternoon emailed an accountant to try and get an appointment urgently. I hadn't realised it was all so complicated and it was remiss of me to not be aware of the CGT changes made in 2020 due to not renting out the property. Thanks...
                      07-12-2021, 17:28 PM
                    • Reply to Caught out by changes to Capital Gains Tax
                      by jpkeates
                      Refurbishment while you were living there is only allowable against CGT if it was solely and exclusively for the business, so if it was to prepare the property to be let, it would be OK.
                      If it was simply to improve what was then your home, it fails the basic test.

                      Get yourself to...
                      07-12-2021, 16:22 PM
                    • Reply to Caught out by changes to Capital Gains Tax
                      by AndrewDod
                      The probate resets a lot of the stuff, but my main response was unapproved
                      07-12-2021, 15:36 PM
                    • Reply to Caught out by changes to Capital Gains Tax
                      by AndrewDod
                      You are really short on detail:

                      Date (year & month) bought in joint names ______ (what % was yours then)
                      Date it converted to your sole name ______ (presumable date of death of parent 2?)
                      Declared vale at probate _________
                      Capital expenses between date of probate 2...
                      07-12-2021, 15:33 PM
                    • Reply to Caught out by changes to Capital Gains Tax
                      by reluctantlandlord1976
                      We were all joint owners. Bought it with parents. I lived there for 10 years before buying own home. I became sole owner upon their deaths. Rented out since 2007-2019. Empty last two year as trying to sell. Hence I was off the landlord radar. I am now extremely worried by your statement that refurbishment...
                      07-12-2021, 14:53 PM
                    • Reply to Caught out by changes to Capital Gains Tax
                      by AndrewDod
                      Let us know the exact timescale and money involved year by year - I am sure some kind person (or even myself) with do a calculation for you so that you can assess the risks involved
                      07-12-2021, 14:33 PM
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