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Apr, 2014

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  1. #1

    Default what amount would you be taxed on?

    I am new to this and have a complicated situation... I have a property with a buy to let mortgage on, my mam has a mortgage free property. We would like my mam to be able to rent out her property for say £500/month, then if she paid me the same rent per month would she be taxed on her rent? what would be the calculation for offsetting tax against interest etc?

  2. #2
    Join Date
    Nov 2012
    Posts
    145

    Default

    I'm not an expert, so seek more qualified advice but my understanding is:

    You would both be taxed on the £500 a month (but not if any other earnings added to this didn't exceed the personal tax threshold). You can claim tax relief on your buy to let mortgage.

  3. #3
    Join Date
    Aug 2008
    Posts
    3,247

    Default

    1. Your mam's rental profit = 500 x 12 = 6000 pds minus house insurance , repairs & maintenance etc.

    2. Her tax will be calculated as " annual income from work" plus "rental profit" minus "personal free allowance at 8105 pds" = income taxable at 20% or 40% rate.

    3. Your own "rental profit" will be further reduced by annual interest on your mortage.

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