UK Landlord Forum / Life

Is tax payable on rental property ? Can I use expenses such as renovations work to offset tax as no real profit yet?

Are you an accidental landlord or have you gone into renting property out intentionally?

Clearly accidental from my knowledge

Phew, I can now give a none sarcastic answer.

The income from the property is taxed at your tax
rate i.e 20 or 40%. The interest element on the mortgage does not form part of this so if your rent is £500, mortgage £400 and the interest element £300 it's just £200 that would be part of your income and thusly taxed.  Against this income you can write of maintanence costs and associated fees.

When you sell the property you will be subject to capital gains tax (cgt) at 20%, you have a cgt annual allowance (close to 11k) that would be taken off the profit first. Against this you can offset capital expenditure on improvements to the house i.e the newly fitted Kitchen/bathroom.  That's it really from
Understanding.

You can also elect if the property is furnished ( they don't really check) to not claim any repairs BUT get a flat 10% of rent wear and tear allowance.

I find this to be more generous than claiming the repairs.

You can claim 10% wear-and-tear on a furnished property, this is nice and simple. However, you can also claim for repairs.

Thanks a lot

The sarcasm wasn't too painful