Renting out PPR and tax liabilities

Hi,

Can anyone shed some light on my figures.

Have a mortgage I'm struggling with @ 2,250 per month

House would rent for 2k - 2.25k per month . V nice house in SCD.

Monthly interest in the region of 1,450.

High end fit out so a bit of deductible there at 12.5% over 8 years.

My own (very rough) figures land me with a tax liability of 6,400 of based on rental income of 27k so basically a net repayment of 1,717 against my mortgage if you take that in isolation.

If I am renting a smaller property for 1300 pm will I get any tax relief on my rental expenditure to mitigate the tax liability?

Thanks,
S.

Struggling said:

Hi,

If I am renting a smaller property for 1300 pm will I get any tax relief on my rental expenditure to mitigate the tax liability?

Thanks,
S.

Click to expand...

No, rent relief is being phased out and you need to have been renting before budget 2011 to qualify.

Thanks Shesells. No comfort there so. Back to the drawing board.

S.

Are you sure you'd get deductibles on the fit-out that is already there? That was purchased prior to renting it out?

Hi Derek,

No but below is a post which addresses this. Sorry cant post links had to copy and paste

Originally Posted by Macstuff
Just two additional points to consider.
1. PreLetting expenses cannot be deducted i.e. expenses incurred prior to your FIRST rental. Any expenses you incur once tenants are in place or between tenants can be deducted.
(Wear and tear on fixtures and fittings is not included in the statement above)

2. You must register with the NPPR in order to be able to claim relief on the mortgage payments.

One question - do you need mortgage protection? IE if the apt. is now rented then you are less likely to need to/be able to make a claim. I know you can write it off against tax but you are still part funding it. Does renting out the property invalidate the terms and conditions of the mortgage protection?
In relation to the above:
1. A strict interpretation of the legislation would mean you are not entitled to wear & tear on furniture & fittings bought prior to letting, but I've never seen an issue with this in practice. However, the fixtures & fittings brought in are already some of the way through their tax-life, so they can only be written off over the remainder of it, at 12.5% of their cost p.a.

Without going into the very many complicated details I am convinced that your suggested course of action will provide you with no or minimal financial advantage, only headaches.

Don't do it.

get a lodger -tax free rent instead !

Thanks Oldnick, I know you are a landlord and I guess you know what you're talking about.