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TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15979
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
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We are looking to rent our house out as I will be living abroad

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We are looking to rent our house out as I will be living abroad for 6 months with our family. I am a higher tax payer and my wife does not work. We have a joint mortgage. Can you advise what tax we would pay on the rental income ? If the property were rented out in her name could we take advantage of her tax free allowance ? This is the only property we own.
Best regards,

Assuming the property is jointly owned by you and your wife, the rental income would be split on a 50:50 basis unless it is actually owned in proportions other than 50:50 and you notify the tax office on a form 17.

The amount of tax you would pay will depend on the surplus of rental income over and above the deductible expenses that you incur. Take a look here for information on the types of expenses you can claim against your rental income. You only pay income tax on rental income. It is not liable to national insurance contributions.

If you are a 40% taxpayer, you will clearly pay 40% tax on your share of the profit. If you are a 45% taxpayer, you will pay tax at 45%. Unless your wife's income from all taxable sources exceeds £10,000 per annum, she will pay no tax on her share of the profit.

I hope this helps but let me know if you have any further questions.
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