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Taxation On Rental Income

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If a "homeowner" can't sell their house for the price they want, and decide to let it instead, and then rent the house of another owner doing the same thing, are they both paying extra income tax on their rental income? Is this another factor in keeping prices artificially high - the desire of the treasury to capture more tax?

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If a "homeowner" can't sell their house for the price they want, and decide to let it instead, and then rent the house of another owner doing the same thing, are they both paying extra income tax on their rental income? Is this another factor in keeping prices artificially high - the desire of the treasury to capture more tax?

Yes. Letting your home while renting another is *hugely* tax inefficient (but not as inefficient as paying the stamp duty for a couple of years). I know, I did it for a while.

It's like families sitting each other's children instead of paying for childcare. They now have to be licensed or they are breaking the law; the cynic in me thinks that this is so that the govt can begin to collect the tax on "imputed child care".

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<snip> It's like families sitting each other's children instead of paying for childcare. They now have to be licensed or they are breaking the law; the cynic in me thinks that this is so that the govt can begin to collect the tax on "imputed child care". <snip>

They don't have to be licensed if they do if for free.

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<br />If a "homeowner" can't sell their house for the price they want, and decide to let it instead, and then rent the house of another owner doing the same thing, are they both paying extra income tax on their rental income? Is this another factor in keeping prices artificially high - the desire of the treasury to capture more tax?<br />
<br /><br /><br />

Serious question. How many people that are in this position do you think are actually paying income tax on their rental income? The government can't even collar the BTL brigade with a simple cross reference with the TDS. What hope have they got with the 'rent to rent' lot?

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If a "homeowner" can't sell their house for the price they want, and decide to let it instead, and then rent the house of another owner doing the same thing, are they both paying extra income tax on their rental income? Is this another factor in keeping prices artificially high - the desire of the treasury to capture more tax?

It depends, if they both have 95% morgages then much of the income is used to pay the interest payments on the morgage which means no tax is paid. BTL's still receive morgage tax relief at the owner's highest tax rate, something normal home owners lost in the 80's. The logic is that they should pay capital gains on the sale, but if they move back for a few years they can get around this.

Edited by rit

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  • 245 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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