Tax Deductible Rent in Let-to-Let?

07/01/2018 17:48:25

I have noticed that there have been / will be changes in taxation laws for property investors; for example, that in buy-to-let arrangements, mortgage interest will no longer be tax-deductible.

Could someone please explain to me what is the case for the let-to-let arrangements? I imagine this is less common, but if a fixed rent is paid to a landlord with the permission to sublet, is the fixed rent tax-deductible from the total subletting revenue?

For example, let’s say I need a garage for storage purposes but the house I live in does not have one. I find a landlord who is willing to rent me a 4-bed property with a garage, and I sublet the 4 bedrooms and use the garage for personal storage. If my revenue from the 4-bedroom sublet is 2000 and my fixed rent cost is 1800, are all 1800 tax-deductible? Or perhaps would I need to determine the relative value of the garage (say 200) and only 1600 is tax deductible? Or is the rent not tax-deductible at all?

Thank you in advance for your help!

Re:Tax Deductible Rent in Let-to-Let?

08/01/2018 12:01:06
The £1800 will still be tax deductible as an expense for rent. Rent is not a finance cost and that is what the changes are in relation to.
Kind regards

Re:Tax Deductible Rent in Let-to-Let?

08/01/2018 19:29:07
Thank you very much for the prompt response!