Tax paid on rent...

[sbull9]

Hi

I have been left 50% of a property in a will (I am considering taking out a loan and buying out the other person) and I am considering renting it out. Can anyone tell me the tax implications on the rent received.

Thank you

[Poppy]

Straight from the horse's mouth.

HM Revenue & Customs (http://customs.hmrc.gov.uk/channelsPortalWebApp/channelsPortalWebApp.portal?_nfpb=true&_pageLabel=pageVAT_ShowContent&propertyType=document&columns=1&id=HMCE_PROD1_025394)

[Tax Accountant]

Hi

I have been left 50% of a property in a will (I am considering taking out a loan and buying out the other person) and I am considering renting it out. Can anyone tell me the tax implications on the rent received.

Thank you

I assume thay you have not occupied the property as your only or main residence.

For CGT purposes, you have inherited the property at its market value.

If you buy out the other half, this cost will be added to the market value of the half you have inherited.

If and when you sell in the future, the above (market value + cost of buying the other half) will be your base cost in the calculation of any gains.

In the meantime, rental profits (rents less allowable expenses) will be added to you other taxable income and gains and taxed according to the tax band it falls into. The interest you will pay, on the loan to buy out the other half, will be allowed as an expense of your lettings business.

I hope this helps.

Ramnik