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Tax Return - Profit, Income, Tax Deductable

Started by Raw2321, December 17, 2023, 07:07:30 PM

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Hi all,

Just a quick question regarding my end of financial year tax return.

Will I only be taxed on my profit from my rental property, or will I get taxed on the full rental income?

As an example:

Let's say I get £800 a month in rental income and I pay £700 a month for the mortgage.

Will I pay tax on the £100 a month profit? Or will I pay tax on the £800 a month profit?




You pay tax on your income (hence the name of the tax). But you can offset operating costs that arise solely and exclusively from the business against the income.

You can't do that with interest and other finance costs, though. They have a special treatment. So, for your example, you would remove any repayment element of the mortgage (you can't claim for that at all), and once you'd worked out how much tax you were to pay (including any from other income like salary from work), you would simply deduct 20% (the base tax rate) of the finance cost.

I'm assuming those figures are examples, because if you're letting a property with a £700 mortgae for £800, I'd sell it.