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| *Ostroff, Fair and Company>>>United Kingdom Taxes |
Tax on rental income: Do you pay tax if the rent you get from a property is less than ur monthly mortgage? |
eg: The monthly mortgage cost for the property is 拢900. The maximum rent I get from a tenant is 拢700 a month. (giving a 拢200 shortfall) Therefore I make NO profit. Do I still declare the 拢700 as taxable income? In assessing rental profits, you deduct the interest element of mortgage payments - not capital repayments. So if it is an interest only mortgage, you have a loss of GBP200 per month. If, however, the 900 includes 250 capital and 650 interest then you have a monthly taxable profit of 50. Don`t forget you can deduct other expenses that relate to the income - including letting agents` fees and maintenance costs, or any bills you pay (council tax etc) on the property for the tenant. It depends on the local tax law requirement. Some country like in Canada allows only the interest part of the mortgage but not the total mortgage. And one more condition,only the part of mortgage interest that generate rent income (property owner if live in the same building,his part of mortgage interest is not qualify for tax deduction).Because Canadian is highly taxed for everything. I hope Britian is less taxed. |
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