# Income tax payments on rental property



## steviebabe0 (May 14, 2013)

Looking to buy a house with a view to rent out, does anyone know how much income tax I will be looking at paying each month. Looking at about £400 pcm rental income against mortgage payments of £360 ish plus buildings insurance which I guess will make my outgoings to about £375 pcm. This is a regular mortgage so I believe I can only use the interest part as allowable expenses to offset against income tax (as well as wear and tear etc). Havent got real accurate figure on interest yet as its only early stages but assuming £100pcm would this mean I only pay income tax on £260 a month (income minus interset plus 10% allowable wear and tear ie 400-140). Ive tried googling but disappearing up my own backside lol. Tenant will be paying all other bills.
Any pointers or advice appreciated before I completely confuse myself :thumb:


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## fatdazza (Dec 29, 2010)

work out how much profit you will make after all allowable expenses (which include mortgage interest but not any mortgage repayment).

Other allowable expenses are:

any letting agents fees
buildings and contents insurance
maintenance expenses (e.g painting, boiler servicing etc)

but not property improvement (e.g. adding a conservatory)
Only if a furnished let can you claim 10% of net rent as wear and tear.

This profit will be treated as income and you will be taxed accordingly. So remember if the additional income pushes you into a higher tax bracket you will pay higher rates of tax.


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## steviebabe0 (May 14, 2013)

It will be furnished as its the father in laws house who cant afford it anymore (shortfall on endowments and also a good spender, hes 82 and thought he would have croaked by now so never worried about it). Just trying to work out whether to charge rent official or just cash to avoid hassle. The house puchase will be official as I want my name on the deeds for security (dont trust the wifes siblings). I want to try and do it proper so there is no come back on me, I've done family favours before only to come unstuck. I'm just trying to work out roughly how much tax I will be looking at paying as I dont want to subsidise the old lad.


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## MEH4N (Mar 15, 2012)

It gets added on to your income for the year. So whichever tax bracket you fit into, you will be taxed accordingly. Usually you will just need to do a self assessment.


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