Renting out Apartment - what are the implications?

Hi all,

I'm moving out of my apartment which I own with an ex-girlfriend (she moved out 3 years ago - we're still cordial). We've owned the place for 5 years.

It has been for sale for the past year but no one is interested.
I'm moving out at the end of the month so we (me and the ex) are going to try to get the place rented out.

Can someone please let me know (in simple terms) the tax implications of doing this? I've looked around this site for answers but am tying myself in knots!

Do we lose the mortgage interest relief? Are there any other costs/benefits?

Cheers,
agwa

Moved from Mortgages and Buying and Selling Homes.

Have you checked the Property Investment FAQ, key posts and the many existing threads about the tax and other implications of renting out a former PPR? This stuff is covered in many existing threads.

If you are about to rent it out now and it's more than 2 years since you bought it then at least there is no clawback of stamp duty. You cannot claim owner occupier mortgage interest relief on a rental property mortgage. Your rental income is assessable for income tax. You can offset interest on the outstanding mortgage against rental income when doing your rental income tax return. There is a key post on some of the reasons to consider an interest only mortgage on a rental property although not everybody agrees with Brendan's analysis. You can offset other allowable expenses too. You must register with the PRTB in most cases. If the property is not disposed of within 12 months of vacating it as your PPR then some portion of any future resale capital gain will be assessable for CGT.

You should get professional advice on the tax and investment aspects of renting out your former PPR if you don't know enough about them already.

Thanks for your help ClubMan