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Tax Implications

Tax Implications

When you start to rent out property this is known as untaxed income. Therefore you should inform HMRC straight away when you start to receive rental income. This can be done online or via the telephone however you may wish to appoint an accountant. By informing HMRC you will receive a self-assessment form where your rents can be detailed along with your other income.

Tax is payable on the net rents after the deduction of expenses. Expenses can include:

  1. Letting fees
  2. Mortgage interest ( now completed as a tax credit and only applies to basic rate tax payers)
  3. Repairs & Maintenance
  4. Insurance
  5. Gas /Electric checks/ Energy performance certs
  6. Accountancy costs

The tax rate is the rate of tax you fall under with your other income however beware as rental income could put you in a higher bracket.

We take our advice from local Chartered Accountants J F Hornby & Co whom we are happy to recommend. They are a family run organisation who are extremely attentive and will ensure you receive the maximum amount of tax relief available. They act for many landlords in the area some of which have numerous properties therefore they are very experienced. To contact them please visit www.jfhornby.com or call 01229 588077 and ask for either Paul or Tom who would be happy to help you.

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