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Tax on rent

Mr A no longer has a mortgage and wants to retire to another part of the country.

He cannot, however, sell his house after months of trying so he decides to let out his house and rent elsewhere.

As he will be far away he will need it managed so he is out of pocket already; the taxman, however, makes it even worse as he has to pay tax on the rent he receives (less expenses which are not huge) but cannot claim tax relief on the rent he will pay.

This seems very unfair to Mr A; the question is, is there anything that can be done to mitigate this?

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By Ford
05th Dec 2012 11:27

Solution

The solution can be found in example 2 here http://www.hmrc.gov.uk/manuals/bimmanual/bim45700.htm

Ford

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If he doesn't move until he sells the old property...

... then job done!

It's not unfair at all. It's his choice!

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avatar
05th Dec 2012 12:18

As George eludes to.

he has made a choice to rent....

 

But hasn't he considered remortgaging his buy to let property to provide the funds to buy a new house? Seems quite obvious.....just wondering why it hasn't been considered?

 

(assuming he can get 75-80% LTV then presumably he would only need a further small mortgage or adjust his expectations and buy an appropriately sized house at the new location).

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