I rent out my house.( rent is same as mortgage so make no profit) I filled out my self assessment tax return and I end up owing so much? ?
- babyboomer1001Lv 73 weeks ago
You ARE making a profit. Your house is increasing in value and the full amount of the mortgage has been paid for you. Most homes do not command that much rent. In other words, most owners still have to contribute to the mortgage after a tenant pays a rental portion. You said the tenant is paying the full mortgage so what the heck are you talking about and where'd you get the idea that a tax return takes nothing else into account? That notion is RIDICULOUS!Source(s): Certified Paralegal,with 25+ years' experience.
- JudyLv 73 weeks ago
There IS profit. Some of your mortgage payment gives you EQUITY
- 3 weeks ago
Karen you should have stated that you were in the UK. Tax is always country specific. For 2019 the deduction of the interest portion of your rental's mortgage is capped at the basic rate (20%). Starting in 2020 you can no longer deduct the interest portion of your mortgage against your rental stream at all. Instead you will get a tax credit at the basic rate. So yes, if you have a large mortgage and are in a higher tax bracket you will absolutely be paying tax on money you do not receive.
Unfair? Blame the politicians who have decided that small landlords are Public Enemy Number One and deserve to be hung, drawn and quartered. I have stopped renting out my property, it is just not cost effective. Then the politicians complain that there is a housing shortage. Who would have thought.
- Girlie ElectricsLv 73 weeks ago
That's the way it works.
Your mortage payment includes repayment of the principal as well as the interest charge. You don't get to repay the principal with tax-free money .
Use a tax advisor if you've not rented out before now. Some expenses ARE deductible, such as repairs, letting fees, (but not the mortgage)
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- R PLv 73 weeks ago
My answer is for the USA.
The principle portion of your mortgage payment is not a deductible expense.When you filled out the self statement, did you include depreciation?
- Anonymous3 weeks ago
Your payment is a payment, not an expense. And its not deductible. You may or may not be able to deduct actual expenses & depreciation. Not mortgage payments. If it was a business, you could write off the actual interest paid and other expenses. I'm not sure you can do that without itemizing now and it might not be worth it?
- Anonymous3 weeks ago
Assuming USA, then mortgage interest is only deductible if the home is your primary residence. As a rental you don’t qualify for the deductible.
- David B.Lv 73 weeks ago
Your mortgage includes interest, principle as well as escrow for taxes and insurance. Some are not tax-deductible. Certainly, the principle is not.