Will I Pay Tax on Rental Income and Can I Offset it Against the Rent I Am Paying?
I am currently receiving £830 month on property I am letting. On this property I pay an interest-only mortgage of £1750 monthly. I am also living in rented accommodation myself for £800 month. Will I have to pay tax on the £830 of rental income I am receiving and can I offset it against the rent I am paying?
Answer: Firstly, it is important to understand that the rent that you are paying for your rented accommodation can not be offset against any rent that you are receiving.
However, on the property that you are renting out you are receiving an income of £830 per month but have mortgage interest payments of £1750 per month. You are able to offset the mortgage interest (and any other allowable expenditure) against your rental income. This then means that you will not have any tax liability on your rental income as you are actually making a loss because your interest payment is greater than your actual rental income.
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