Do you consider yourself a buy-to-let landlord? Maybe you rent out your home as an “accidental landlord” because you need to move out of your home for personal reasons. Whatever your situation, you need to be aware of your financial responsibilities.
Useful points to consider
Are you looking to rent out your property in the Felixstowe area? We have looked after local landlords just like you for years; we can provide full management or simply provide you with a tenant. If you want to discuss this in more detail with a dedicated member of our lettings team just get in touch.
For the time being, here is some useful information to make a note of.
Informing your mortgage lender
You need to let your lender know that someone other than you will be living there. Depending on how long the arrangement is for, you might need to switch to a different mortgage.
As a landlord you need to know your income tax and capital gains tax liabilities. Here is an overview on these two areas.
Rental income is added to any other income you earn during the year. For example, from employment or savings – to calculate your tax liability. You must declare this income on a Self Assessment tax return each year.
However, you can claim certain expenses to offset against your rental income and reduce your tax bill. This includes, for example, mortgage interest payments, if you have a buy-to-let mortgage, letting agent fees and maintenance costs.
Buy-to-let landlords can offset their mortgage interest payments and some of their costs against their income.
From April 2017 the higher and additional rates of relief will be phased out. They will be restricted to 20% for all landlords by April 2020.
Capital Gains Tax
If you are selling a property that isn’t your main home – including a rental property – it’s likely that you will have to pay Capital Gains Tax on any gain (profit).
You can offset expenses of a capital nature such as replacement windows against capital gains when the property is sold.
As this might be many years later it’s important to keep records and evidence of any such expenditure.
Then when you come to sell check with a financial adviser or accountant what you can claim back.