Rental Income and Tax

[Thunderwing]

I'm looking for some advice - DH and I have become accidental landlords and we are trying to wade our way through all our obligations.

I understand we need to complete a tax return now but I'd appreciate some clarification. Firstly the details (not exact figures and trying to remain vague for privacy reasons)

• We still have 10 years + outstanding mortgage - our repayments are around £300 per month.

• We will get just over £4000 a year in rent.

• We are paying the factoring costs of approx £300pa

• My DH pays 40% tax, I pay 20% (we are in scotland)

When we add up the mortgage repayment and the factoring costs we are actually going to be left with no profit at all from the rent each month. It was never our intention to make money from it, we are just struggling to pay both the rent on our new property and a mortgage at the same time.

So my question is; how much tax are we likely to have to pay on the rent? How out of pocket are we still going to be??

TIA

If you want to PM me what area you're in I can possibly recommend a decent accountant in this field.

Margotsdevil please could you PM me too? Many thanks

It's been awhile since I've done personal tax (and loving my stress free Januarys) but you maybe able to
Offset some of the expenses before the tenants arrive. Especially if the property was able to be let just not let. The hmrc website used to be quite good!

I would be careful about the advice given re splitting the rental by way of a Deed of Trust.I understood that the split has to reflect the actual ownership per the titles.I would get this checked with a CA

It doesn't matter who has the mortgage as it's very unlikely you'll get any tax relief on it tbh. As PP have said, it's the title of the house and if it's jointly owned then the profits will be considered the same.

You will still need to pay tax on the amount left over after the allowable expenses, not including the mortgage repayment.

Hope you get it all sorted soon, OP, and that the tenants are lovely and no trouble.

Get landlord insurance. Ensure the tenants sign a contract
Keep all receipts, bills, expenses