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TonyTax
TonyTax, Tax Consultant
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Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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I am a new buy to let landlord I din t rent out yet my

Resolved Question:

Hello
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?
Submitted: 7 months ago.
Category: Tax
Expert:  TonyTax replied 7 months ago.
Hi. Leave this with me while I do some calculations.
Customer: replied 7 months ago.
ok thank you
Expert:  TonyTax replied 7 months ago.
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 7 months ago.
thank you
I wasn t aware that fees like service charges and ground rent and insurances could be deducted
Expert:  TonyTax replied 7 months ago.
They are all deductible, along with repair and maintenance costs.
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15751
Experience: Inc Tax, CGT, Corp Tax, IHT, VAT.
TonyTax and other Tax Specialists are ready to help you
Customer: replied 7 months ago.
I guess not window replacement..
Expert:  TonyTax replied 7 months ago.
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.

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