Letting a property and Taxable incoming from rent

[ContrataxLtd]

If you used to live in the property, I think you can possibly get private letting relief plus relief for the last 18 months. Best discussing this with your accountant.

Capital gains tax and property - Capital gains tax explained - Tax - Which? Money

That's pretty much correct, the last 18 months are 'deemed occupation' so for CGT purposes you are deemed to have been living in the property. You can also claim lettings relief which is the lower of:

1. £40,000
2. Gain in the let period
3. PPR

So in a lot of cases if you have lived in the property for most of the period of ownership, or you do some careful planning with respect to dates etc. you can reduce the CGT down pretty low.

Martin
Contratax Ltd

[TheCyclingProgrammer]

he says that I am liable for Income tax on rental income less expenses and potentially Capital Gains Tax!

If you used to live in the property, I think you can possibly get private letting relief plus relief for the last 18 months. Best discussing this with your accountant.

Capital gains tax and property - Capital gains tax explained - Tax - Which? Money

[northernladuk]

Interesting. Thanks for the point.

[ContrataxLtd]

Yup. Lots of expenses you can claim though including interest on the mortgage, life insurance, mileage to and from your home to <cough> check on it every month etc. Capital gains will be the price increase from what it is worth when you start letting and sell it all though there are certain thresholds which you need to understand.

You also need consent to let from your current lender.

Do try a search in google. There is so much on there about letting, costs, returns and all that crap. Then you can ask any questions.

Hi NLUK

Just be careful about the bit in bold as that's not actually the way CGT works on a property that has been your main residence at some point. You work out the capital gain over the whole period of ownership and apportion this between periods of occupancy/deemed occupancy (CGT free) and periods let out (CGT to pay). You also take into account lettings relief and various other bits and pieces.

Martin
Contratax Ltd

[northernladuk]

he says that I am liable for Income tax on rental income less expenses and potentially Capital Gains Tax!

Yup. Lots of expenses you can claim though including interest on the mortgage, life insurance, mileage to and from your home to <cough> check on it every month etc. Capital gains will be the price increase from what it is worth when you start letting and sell it all though there are certain thresholds which you need to understand.

You also need consent to let from your current lender.

Do try a search in google. There is so much on there about letting, costs, returns and all that crap. Then you can ask any questions.

[Steerpike]

he says that I am liable for Income tax on rental income less expenses and potentially Capital Gains Tax!

[eek]

I'm trying to decide on whether to sell or let my property. I'm currently considering letting and renting elsewhere in the UK. Prices in the area are rising above average and it looks like a nice asset to hang onto. I will have approx £6000pa after expenses, coming in as extra taxable income. However, this will effectively be nullified in the cost of renting somewhere else. There is also capital gains tax coming into play as it will no longer be my main residence. Just wondered if anyone had any experiences to share and/or advice or factors I had not yet considered. I keep things pretty frugal but this is likely to push me well over the higher rate tax threshold and might make it more of a burden to hang onto.

Any experiences or tips?

What does your accountant say?

[Steerpike]

I'm trying to decide on whether to sell or let my property. I'm currently considering letting and renting elsewhere in the UK. Prices in the area are rising above average and it looks like a nice asset to hang onto. I will have approx £6000pa after expenses, coming in as extra taxable income. However, this will effectively be nullified in the cost of renting somewhere else. There is also capital gains tax coming into play as it will no longer be my main residence. Just wondered if anyone had any experiences to share and/or advice or factors I had not yet considered. I keep things pretty frugal but this is likely to push me well over the higher rate tax threshold and might make it more of a burden to hang onto.

Any experiences or tips?