Lodgers' rents: set-off mortgage interest against tax

[Michael12]

I live in a property and rent out two rooms (one to my brother).

The third person pays £75/week which falls below the tax free allowance for lodgers.

My brother pays £50/week, however my mortage interest is £60/week.

Does this mean I pay no tax? (I'm sure I am wrong but could someone explain why...)

Thanks...

[TaxationPete]

You can only claim interest by proportion for the area of the rooms that you rent out and specific to the lodgers. All the common areas are not specific so there is no claim for those areas. Regards Peter

[MaryQK]

I thought if you are claiming the 'rent a room' tax relief (£4250) then you cannot claim any of your mortgage interest?

Possible Scenario: I live in a house and rent all of the upstairs to lodger. I reside downstairs but we both share the kitchen (which is situated downstairs as well). Let’s say mortgage interest is £1000.

Does that mean I can minus £4250 and also claim interest for £500 (half of the mortgage interest – since the lodger has complete and exclusive access to half of the house) from the total rental income received from lodger?

[Telometer]

To OP: EITHER:

1. Total rent from lodgers = £6,500 per annum. Tax the excess over £4,250 - i.e. taxable income = £2,250.

NB, if you charge extra for electricity, council tax etc., total rent including these items = £ (say) 7,500 per annum, Tax the excess over £4,250 - i.e. taxable income = £3,250.

OR:

2. Total rent from lodgers = £6,500. Then calculate allowable expenses. ~I guess two bedrooms = 25% of the property? So claim 25% of interest costs, maintenance, gas bills etc. etc. etc.

So, MaryQK, you may not have your cake and eat it.

[MaryQK]

LOL.

I was only aware of the first one. So bit suprised when i saw mortgage interest.