Buy to Let Does Pay
The taxman is apparently about to clamp down on the buy to let market. But for the honest landlord this should not cause any problems.
Many investors who do not invest in property feel it is about time as with all the tax relief available to landlords those with a mortgage pay no tax or at least very little. It is when they come to sell their properties they will have to pay capital gains tax on any profits.
The rules are that the owners of property must declare income from the property for the current year. There are some expenses that can be claimed for such as all the interest payment (but not capital) on the mortgage taken out on the property. Maintenance costs, fees for letting agents/managers, depreciation of furniture and furnishings can be claimed at a rate of 10% of the rental income per tax year plus solicitor’s, surveyors and advertising fees.
If a landlord’s allowable outgoings exceed income they will not pay tax on the rent. If income is more than outgoings, tax will be charged at either 40% or 22%. Income form a buy to let property could put taxpayers into the 40% bracket.
Finally a new investor must inform HMRC by the 6th October in the year following the tax year when the investment began.
|
