Hi. I’m thinking of purchasing a property for investment purposes. Will the rental income class as income to be based for maintenance payments? How does it work?
Hello
Yes, assuming you declare it to HMRC, then it's taxable income. You could have a word with CMS to get confirmation from them.
Hello
Profit (as opposed to total rent received) from renting will be considered as unearned income and taken into account by CMS when calculating child maintenance if the total for the tax year is 2500 or more.
Make sure you keep all receipts for expenses incurred (agents fees, repairs and upkeep of the property, insurances, financing costs to buy the property) otherwise the reported profit will be higher than it should.
Be aware
Profit (as opposed to total rent received) from renting will be considered as unearned income and taken into account by CMS when calculating child maintenance if the total for the tax year is 2500 or more.
Be aware that the CMS uses the gross taxable profit of the property, which now includes mortgage interest costs. So even though this is money that - from your perspective - is an actual cost of running the property and which was paid in its entirety to the mortgage provider, as far as the CMS are concerned they see it as gross income and assess you on it. I have a HMCTS appeal about this which is waiting to be heard.
Correct. Tax relief for finance costs on rented property is less favourable than before. So, the reported profit from renting will be higher. Hence CMS assessment will be higher too even though the landlord incurs the finance cost.
I think UK government was trying to discourage buy to let for fear it would cause housing shortage for first time buyers?
Good luck with HMCTS. My ex's last appeal took almost a year to come to a conclusion. For the latest appeal I still await the details even though the appeal was raised in March.
Hi. I’m thinking of purchasing a property for investment purposes. Will the rental income class as income to be based for maintenance payments? How does it work?
Im a landlord… have been for 20 years.
Tax year 20-21 (covid) I paid mortgage interest of around £40k the government will give 20% relief so I had to pay tax on £32K of interest expense.
even though this was an expense CMS calculated my earning to include that extra £32K
You can speak with a specialist and you will understand how it works.