Hi. I plan to rent out my house and move into my Fiance's house with him and my baby son. A couple of people told me that if the rent received only just covered the mortgage payment on my house (ie pay all rental income against the mortgage) then I would pay no tax.I thought it was only the interest element on the mortgage payment that was deductible for tax (together with other allowable expenses like repairs, insurance etc).Please tell me which is correct. Naturally, I would like to pay as little tax as possible so if there is a way of paying no tax via the mortgage payment then I would be very interested in this option!Thank you in anticipation of your help.
System of Law: England-and-Wales
Thank you for your question. Please ask for clarification until you are satisfied with my answer. If you are satisfied please press accept button this is the only way I can get paid.===================It is only the interest element of the mortgage repayments that counts as expense for the purpose of rental income.
Other non capital expenses like repairs and insurance are also deductible.
The only way to reduce tax which you pay is to rent out only part of the property and live in the other part this was you qualify for rent a room scheme This would give you extra £4250 tax free income. Other then that it is taxable as any other income.
Qualified accountant and bookkeeper running my own practice since 2008.