X

Sign Up

or

By signing up I agree to Property Tribes Terms and Conditions


Already a PT member? Log In

Sign Up

Sign Up With Facebook, Twitter, or Google

or


By signing up, I agree to Property Tribes Terms and Conditions


Already a PT member? Log In

Log In

or


Don't have an account? Sign Up

Forgot Password

To reset your password just enter the email address you registered with and we'll send you a link to access a new password.


Already a PT member? Log In

Don't have an account? Sign Up

  • Tax

    Paying tax on ‘profits’

    Newby question...

    I’m renting out my old property that I used to live in and am about to complete my first tax assessment.

    it states I need to pay tax on any ‘profit’ however due to circumstances I am losing money and having to subsidise the costs and therefore are making and ‘profit’

    i understand there are deductible costs but as I’m not making profit do I need to pay tax?

    thanks

    0
    0

    I believe you cannot offset interest or any capital you repay. For example if you rent out the property for £500 a month and you have repayment of £300 and interest of £250. You will get an effective 50% relief on the interest element making £125 that you can offset as a cost  however this is for 17/18 year only and this is being reduced this year and then finally to no interest can be allowed as a cost in 20/21

    Therefore in this scenario you would pay tax on £375 (500 less 125).

    obviously you may have other costs that are fully allowable like repairs, letting fee and the like

    You can offset the interest as a cost if the property is in a ltd company.

    0
    0

    It’s not nonsense. I failed to say that the interest cannot be claimed as an expense if you are a higher rate payer. 

    Use this as a basic calculator on google  

    I am not an expert in privately owned investments (domestic) as my properties are owned in ltd and 95% commercial. I also pay for accountants to complete the accounts but I know enough to be able to do what I do and own what I own without borrowings  

    so please correct me where I mentioned nonsense? Capital repayment cannot be offset and a proportion of the interest can’t (when you are a higher rate payer) which will be all in 20/21?



    0
    0

    If the mortgage is an IOM then complete return and show the interest - which will then result in a loss which is carried forward sequentially until there is a profit. Same with repayment mortgage but you need to strip out interest element (lender does this for you)

    S.24 will make an adjustment to the allowable interest offset - resulting this year in a slightly lower loss than the actual loss.

    0
    0