Tax on rental income

moneymakeover

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Let's say rental income is 2k per month

And bank repayments 1600
Of which interest 300

Between management fees and expenses say 400

So no net cash income.

But tax liability on 24k - 8.4k

Round figures, higher rate, the tax might be 7.5k

Now I understand there is capital repayment of 15.6k which is great.

But each October the tax man will be looking for 7.5k

In this scenario, which I envisage quite soon in my situation, it would make sense to stop /reduce pension payments?

What I mean is, if things were just ticking over, getting by financially, kids, holidays and that kind of thing.

And if it meant the rental property was paid off by retirement age.
 
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The profit is used to pay capital

So each month the bank gets 1300 capital and 300 interest

So revenue looks at the 1300 and demands 650 of it
 
Without the full information of a MoneyMakeover, no one can answer this question.

Brendan
Well while it might require more information

The reality is that the revenue has to be paid

So either the pension gets cut back

Or the bank gets interest only

The best result I guess is if the capital is paid off

That way the rental income on retirement will attract tax at the low rate
 
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