An0n0m0us

If you get agreement from your mortgage company that you can let your house out how would the following scenario work:

Rent house out and use the value of that income to rent another house in a part of the country you want to live in. Would you pay tax on your rental income even if you were spending it on renting another house to live in?

Midlife......

iTrader: (2)

http://www.direct.gov.uk/en/MoneyTax...ome/DG_4017814

Seems like you are taxed on in without any relief......

Bring back MIRAS is what I say

Shaun

hodgy0_2

turn your mortgage (if it isn't already) into 100% interest only, which will reduce the monthly payments

as you get a 100% tax relief on the interest

Chip

hodgy0_2

you can claim a 100% of the mortgage interest against any rent/profit you receive.

simples

sorry should have made my statement clearer

addi monster

iTrader: (6)

Dont rent it mate sell it, i sub off a few assett managment companies and i see it on a daily basis mate, tennant moves in / ends up on doal / rent stops / property damaged / evict tennant / 10k refurb / new tennant / and on and on,, sadly most properties we look after end up like this, there are very very few good tennants out there these days imho, be carfull

Chip

Of course, I do that myself, I was just read it wrongly.

hodgy0_2

ahah -- see my edit

Chip

Dingdongler

What sort of gibberish is that? You have no idea where the guy lives. There are plenty of TENANTS out there that do not trash properties.

Given how little you know about the op, his house or his financial circumstances it seems unwise to just tell him to sell.

WRXBOB

You'd be bonkers to sell in the present housing market.
Me & wifey rent out several properties, although some tenants are a pain, some are great tenants!
Re mortgage on a buy-to-let if you want to release equity in the property.
If not, at least change to interest only.
Just my opinion.

addi monster

iTrader: (6)

have you finnished.

it was just my opinion of what i see on a daily basis
i for one hope he gets a good tenant

Dingdongler

I am not Finnish.

At least you've know figured out that we are not talking about him



Or him

An0n0m0us

Thanks for the replies. The mortgage is interest only already. My reason for wanting to consider this is to avoid the cost of selling your house. If it was possible we could move to where we want to live without selling the house leaving us somewhere to come back to if my work changed and I needed to be back near to London at some point in the future.

What I don't know at the moment is how much cost would be involved in terms of letting fees and taxation etc. If we got £1300 a month for ours i'd need £1000 min left to rent somewhere else and that may be totally unrealistic.

It was just a thought on a way to move house without the huge moving costs and selling at the bottom of the market (i bought at the top).

Dingdongler

Letting fees would be between 7-10% of rental income as long as you still manage the property yourself.

Your tax liability will be 40% of (assuming you are 40% tax payer)

Rental income minus ( interest payments + letting fees +10% of rental income as 'wear and tear allowance)

An0n0m0us

Cheers Ding, working on 10% fees and then doing the maths above would leave around the minimum i'd need.