Renting out property and renting another...

[schoolday]

I live in a place which is not handy for work. However I don’t really want to sell and move closer. If I rent out my place and rent a similar priced property nearer work, would I have to pay tax on the rent I’d make?

I don’t want to pay extra to live elsewhere but if I could rent like for like and still pay my mortgage, it would be great.

Hope this makes sense! Thanks

Anyone up 😀

Yes, you need to pay tax on rental income in the normal way.

What you do with the money you make - whether it's spend it on rent or go on holiday - isn't what HMRC cares about.

Sorry if that's not what you hoped for!

Yes you would have to do a self asseesment tax return each year. Should be worth it though depending on mortgage etc? I make about £150 profit a month with my flat after all costs and tax i will have to pay etc

Thanks both. That’s not what I wanted to hear because I presume I can’t set my rent (for the place I’d be renting) against the tax...

I have a higher tax rate so it probably isn’t worth it for me. Plus the costs would be little, it’s a well kept place and nothing needs doing.

Your rent received will be treated as earned income, so taxed as such, and you can't offset rent paid against it. Google section 24, tax relief is decreasing year on year.

Or set my mortgage agsinst the tax?

Thanks, will google

If you pay higher rate tax i wouldn't bother. Once i get my next promotion at work i'll be in the 40% bracket so will sell my property as won't make enough property to make it worth while

Thanks lazypuppy.

40% bracket so will sell my property as won't make enough property to make it worth while

You and lots of others. I'd shift it now before everyone starts.

@Yikesisthatmeinthemirror i don't understand your comment, are lots of people about to get payrises?

It will still be profitable until i start earning more in work

Yes, did the maths and it’s not worth it. I’ll have to sell and buy if I want to live nearer to work.

Unless I can do a house swap with someone for a while but it’s too short a distance for people to want to do that really.

All the people that are already in the 40% bracket are also going to lose their tax relief so they will be worse off, just like you. Your pay rise happens to coordinate with a change of fiscal policy relating to BtoL

The basis of the BtoL calculation is also changing so revenue not profit is taxed. It's punitive @Lazypuppy so people will be incentivised to sell.