Renting my property

[womanwonder]

me and my partner own a property, but we moved out due to having more children. We want to rent this house out now and we want to know if we rented it out would we be able just to charge what we pay on the mortgage and not get taxed for it. Who do we let know about renting the property as well? We are both new to renting and we dont have a clue where to start, could you please help. Thanks

[accountant@uktaxshop]

"womanwonder"

In general for rentals, you will be liable for tax on the amount of the rentals less your expenses and any allowances.

Regarding your mortgage on the property, it is the interest element only that is tax deductible, not the capital portion. Depending on how many years you have left on the mortgage will depend on what proportion is interest.

If you are novices, I personally would suggest use a local agent to let the property for you, and then use an accountant to work out your tax bill. (And yes I accept I am somewhat biased about the second point)

From a commercial point of view there doesnÂ’t seem much point letting the property just to cover the mortgage - there will be other expenses involved, such as agentÂ’s fees, renewals and repairs to the property, insurance etc.

By not making a profit you will not remove your requirement to fill in a tax return showing the property - you need to do this even if you make a loss.

If you would like some more help in this area as a part of a free consultation, please let me know. There are also other factors, such as liability to capital gains tax to consider when you eventually sell the property.

Regards

James Smith
Chartered Accountant
www.uktaxshop.co.uk
01284 764436