How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site. Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask TonyTax Your Own Question
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15956
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
Type Your Tax Question Here...
TonyTax is online now

I am a new buy to let landlord I din t rent out yet my

This answer was rated:

I am a new buy to let landlord
I din t rent out yet my property bought in july 2015
I want to rent it out now for about 1200 a month
the agency will takes fees from me 2400 a year plus 80 pound a month
I pay for a interest mortgage 474 a months
I am full employed and I earn around 40000 a year sometimes more depending on overtimes and tax are deducted automatically from my salary
after renting out how much should I pay ruffly for tax, and is there any tax relief for the bank interest?
Hi. Leave this with me while I do some calculations.
Customer: replied 1 year ago.
ok thank you
Take a look here for the types of expenses you can claim against your rental income. In a full tax year, say 2016/17, you will earn £14,400 in rent, pay £5,688 in mortgage interest, and pay £2400 and £960 in agency fees and commission. I've assumed the fees include VAT. Your profit will be £5,532. Tax on that at 40% will be £2,140.80. If you earn £40,000 in 2016/17, then the tax on your rental profit will be £1,540.80 as £3,000 of the rental profit will be taxed at 20%, not 40%. Your profit will be lower for 2016/17 as the property won't be let for a full tax year. From 6 April 2017, tax relief on buy to let mortgage interest will be gradually reduced over a three year period so that from 2020/21, relief will be given at 20% and not your top rate of income tax as it is now. Take a look at the chart here to see how that will work. If all your rental profit was taxed at 40% in 2016/17 after expenses, then you will get tax relief for the mortgage interest at 40%. In 2017/18 you will get tax relief at your top tax rate on 75% of the interest and at 20% on 25% of the interest. In 2018/19, you will get tax relief at your top tax rate on 50% of the interest and at 20% on 50% of the interest. In 2019/20, you will get tax relief at your top tax rate on 25% of the interest and at 20% on 75% of the interest. In 2020/21, you will get tax relief at 20% on 100% of the mortgage interest. Depending on tax rates in force at the time, you will have a higher taxable profit and will pay more tax. I hope this helps but let me know if you have any further questions.
Customer: replied 1 year ago.
thank you
I wasn t aware that fees like service charges and ground rent and insurances could be deducted
They are all deductible, along with repair and maintenance costs.
TonyTax and other Tax Specialists are ready to help you
Customer: replied 1 year ago.
I guess not window replacement..
It depends how bad the current window system is. Take a look under the heading "Costs of maintenance and repairs" here. There is a note on double glazing.