Updating post from Reddit.
Hi,
As title says I'm renting my old home out to pay for a new build property and have been whollopped with tax.
My old home still has mortgage so am I better off renting out as Ltd company or carry on like this? The accountant said you have to add your job salary on top of rental income and you are taxed on the whole lot. I don't understand this as I pay monthly out of my wage why the house rent can't be seperate.
I've not much experience in this field.
Any ideas? Thanks
Any rental income you recieve is considered income and taxed accordingly.
Say you receive 30k income and then 10k rental income, your amount owed would be similar to if your job income was 39k. You individually have 1k allowance on your rental income.
You van try and offset this buy accounting for expenses, but you can only claim the interest part of your mortgage as an expense.
The system is designed to punish landlords and ensure more housing gets back onto the marker for people to own. I agree with it, but it is am absolute bastard filling out your tax return every year.
Wait until you see the cost involved in moving it into a ltd company. You basically have to sell it at the market rate then pay stamp duty to the tax man It's not as simple as saying my ltd company now owns the property. The other commenter basically has it right you are paying tax for everything so if you are 40% tax payer and your main salary falls into that you are already going to be at least 40% down. This is why buying property via ltd would have been better for a lot of btl landlords. I was stung on this and missed out the chance when i originally got into it. I even have to pay the student loan back with my rental income too so not worth it.
Damn ☹️ that's that then....I'm screwed
My salary is around 28k and after expenses rental income is £6800 I don't spend anything from rental income as that total amount is my new mortgage repayment.
It's painful to cough up £980 every 6 months out from my monthly wage
If they add that all together then tax it as a whole fine!!! why am I still paying my usual paye tax etc via monthly salary? Am I reading it wrong or paying extra tax via paye
Cheers for the info I didn't realise you can't just swap everything over to a Ltd company.
Unfair the sole family man can't get ahead with all this headache put in the way.