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Tax liabilities on buy-to-let homes
If you’re considering purchasing a buy-to-let property and you’ve done your research you’ll know that there will be a number of associated costs.
One such cost that you may not have considered is taxation, but unfortunately for potential landlords, buy-to-let investments attract several different taxes.
Stamp Duty
Stamp Duty must be paid on all purchased properties valued over £125,000 – you can work out how much Stamp Duty you’ll need to pay using the Stamp Duty Calculator.
Income Tax
Rental income will need to be declared on a self-assessment tax return and you’ll pay Income Tax on this (how much you pay will depend on which tax bracket you fall into). However you will be able to deduct certain costs first such as letting agency fees.
Capital Gains Tax
If you sell your investment property, you’ll be expected to pay Capital Gains Tax – this is charged at two rates depending whether you are a basic rate taxpayer or you pay the higher rate of tax. You won’t be charged on the full amount you make as everyone has a tax-free allowance that is taken into consideration.
Inheritance Tax
A buy-to-let property will form part of your estate upon your death, so it will be liable for Inheritance Tax.
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So Smart Money are specialists when it comes to mortgage and insurance. We have access to the UK’s leading brokers and using their knowledge and skills they'll place you with the most suitable lender and product for your needs.
Speak to an expert for mortgage advice, life insurance cover, to protect your income, insurance your home or contents and private medical cover.
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