Tax on rented house

[pjsmum]

Does anyone know whether you have to pay tax on a house that you are renting out? The rent doesn't give us an income, the rent doesn't cover the mortgage.

[soapbox]

I'm not a tax expert so please do not take this advice as being correct - consult with a qualified tax advisor if you need to (or call the IR office).


You need to fill in the right page of the tax return. If you're not making any money then there will be no tax to pay but you still need to declare the income.

They will look at why you are renting it for less than the mortgage though - so if you are renting it to family or friends at a reduced rate may still levy tax on what they think the market rent would be.

The mortgage allowable for tax purposes is an interest only one, not repayment so they will adjust for this too. However you are also allowed a wear and tear allowance which will mean you probably won't end up paying any tax anyway.

[Roobie]

Rental income is taxable but you can deduct mortgage interest, repairs, letting fees, insurance prems etc - if it is let furnished then you can also deduct a wear and tear allowance of 10% of the rental income.

[LIZS]

Yes you are liable for tax on the rent but you can offset the mortgage interest (not capital repayments, I believe) and expenses such as buidings and contents insurance, some maintenance costs, letting agent fees etc against the income so you'd only be liable for tax on the income net of this - perhaps none at all in your case. If the house is jointly owned you can split the income/expenses for personal taxation purposes and you have your own personal allowance before you start to pay tax too although that also includes any other sources of income such as wages, interest on investments etc.

You should probably submit a Self Assessment return anyway so speak to your tax office or the Non Resident Landlord office in Nottingham if you are living outside UK as a special scheme applies.

hth