I have a monetary difference between mortgage payment and rent - will I have to pay tax?
I own a one bedroom property and intend to rent it out. There will be a difference between the mortgage payments on the property and the rent I am considering setting. Will I have to pay tax on this monetary difference? Also can I get an allowance from the taxman for any repairs I have to carry out?
Arthur Weller Replies:
If the gross rent that you receive from your tenant, less the interest element of your mortgage payments, and less any allowable expenses that you incur, results in a positive figure, then this net figure is rental income which is taxable, and you will have to pay tax on it depending on the level of your other income in the tax year, and depending on your personal allowance. Frequently repairs to a let property are categorised as allowable expenses – see http://www.hmrc.gov.uk/manuals/pimmanual/PIM2020.htm.
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