I want to purchase a property and let it out to someone, become a landlord and put the income from them to the mortgage repayments.
How does income tax work on this? I understand income from property is taxable, but it will go straight back into the house in the form of the mortgage payments. Will I still pay tax on it? I've looked at this income tax website which has showed me I will pay tax (lots of!) on income I can't spend.
A fairly obvious point that a lot of people seem to miss is that principal repayments on a mortgage are not tax deductible. So it is quite common for a property investment to be profitable and cash-flow negative at the same time.
Not also that interest relief on residential lettings is restricted to 85% in 2018, 90% in 2019 and 95% in 2020 i.e part of interest expense not deductible for tax purposes. LPT also not deductible
Hi Solded, do a search on the site, this issue is well covered, I think on this site posters are either pro rental or anti rental, for me the risks, the tax and the anti landlord establishment would make me think very hard.