SMF - Just Installed!

new tax implications for cash buyers

Started by Cosmiques, November 07, 2017, 01:43:47 PM

Previous topic - Next topic

Cosmiques

Hiya folks

I need to get my head around the up and coming tax implications. I am potentially going to be cash buying properties to rent out. Rental income shouldn't exceed 12k per year. I know the amount of tax I pay will be determined by any earned income too but I believe if I don't need a mortgage the tax implications won't hit me as hard?   

It'll be my first time renting so I'm just trying to understand the basics right now. Any advice would be greatly appreciated

Thanks

Hippogriff

Quote from: Cosmiques on November 07, 2017, 01:43:47 PMI need to get my head around the up and coming tax implications. I am potentially going to be cash buying properties to rent out. Rental income shouldn't exceed 12k per year. I know the amount of tax I pay will be determined by any earned income too but I believe if I don't need a mortgage the tax implications won't hit me as hard?

I think you've got it kinda backwards.

Without a mortgage, if you earn £12,000 in rental income then you'll pay tax on that £12,000 minus allowable expenses.

With a mortgage, if you earn £12,000 in rental income then you'll pay tax on that £12,000 minus allowable expenses minus some interest allowance (this is what has gotten, and is getting, less 'generous'). So - if you have a mortgage there is still an allowance for interest paid. However, the world is much simpler when you just own the assets outright.

Whatever happens, you'll be paying an extra 3% SDLT over and above what you're used to, for each property - so be careful. £3,000 every £100,000. One time deal.

You won't be renting... you'll be letting.