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| *Ostroff, Fair and Company>>>United Kingdom Taxes |
If I was to rent out my flat and move in with my girlfriend what would be the most tax efficient manner? |
The Flats in London. Its Got a mortgage of 135K - Its worth 250K and I dont want to pay CGT on the gain Two things to think about: 1. Rental income 2. Capital gains tax Rental income will be taxable but you can offset any expenses (including your mortgage interest but not your capital repayments) against it. You can set off the council tax, advertising, agents fees, insurance etc and this will reduce the tax you pay. You can also claim a deduction for the cost of any furniture (basically a flat rate deduction of 10% of rent). The HMRC booklet about renting out your own home has chat on this. Ignore the reference from another answerer to 拢350 per month -this is only if you rent out a room in a flat and you live there too. 2. Capital gains - you will get an element of exemption when you sell the flat for the time that you have lived there. Broadly, if you own the flat for 10 years and lived there for 4 you would get 4/10 of the gain exempt. HMRC will also exempt the last 3 years of ownership getting another 3/10 out of tax. You can also claim another relief from tax called letting relief which may well exempt the rest of the gain if you are renting out the flat whilst you're away from it. So you can substantially reduce or even wipe out the CGT with these reliefs. Worth getting a tax consultant to do the sums for you. Hope this helps! Flick Source(s): www.hmrc.gov.uk I'm a tax adviser! don't tell anyone and just pocket the cash don't know a real answer, sorry, but there is an amount you can rent it for- I think it is 拢350 - that means you don't have to pay tax on their rent. All rent payments are subject to tax at your normal rate. You can offset interest payments on your mortgage (not capital), repairs and renewals and legal fees. Seek the advice of a solicitor or accountant for the Capital Gains Tax element as you have an annual limit of circa 拢8000 but because you have lived in the property previously, you can use this to increase your allowance some how. Best of luck! Speak to accountants...but there is a way....its pretty simple... contact PMA Accountants 0700 340 1367 - www.pmaaccountants.co.uk |
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