Tax on renting my main Home, but its a joint venture - please help

[damodee]

I have a question for the good members of this site which is ragarding tax as I have found the inland revenue website to be very complicated.

Heres my question and I hope someone will help me!

I have recently purchased my first home together with my Mother for a total price of £57,000. My mom works part time and I am a full time civil servant. I now want to rent the property and we have asked for a rent of £450 paid by the DSS the mortgage payment a month is £420. Do I have to pay tax on the rent as its un earned income and if so how much?

Any help would be greatly appreciated, many thanks.

Damian

[ian.wright@beechams.]

You are only allowed the interest element in your mortgage payments against your rental profits. I am assuming this mortgage payment include capital and therefore a profit is being made.

There are other expenses of course, managment costs, repairs, advertising etc. Also if the property is let part or fully furnished then you can also have 10% of the rent received (minus rates) deducted from the profits.

Since the property is let then everything should be split 50:50 (assuming that is the ratio).

You have until 6 October following the tax year end you stared receibing rent i.e. if you started receiving rent between 6/4/04 and 5/4/05 then you must report this by 6/10/05 and pay tax on 31/1/06.

Tax payable will be at your marginal rate, so if you are both basic rate tax payers, it will be at 22%.

If your mother's earnings are small she may not pay any tax at all.

I hope this helps.