BUY TO LET
Buying a property with the intention of renting it out to others, so that you become the landlord, is called buy to let and a buy to let mortgage will be required on the property.
This can be a great way to create additional monthly income, through the difference between the costs of the property and the rental amount. How to calculate this potential income is explained below.
If the property goes up in value whilst you own it you could also increase the amount of money you have overall.
To calculate the income you could get from a property use the following calculation:
Yearly rental income amount (based on having tenants for 9 months of the year)
Yearly mortgage repayment costs
Yearly landlords insurance costs
Annual safety certificates (ie a landlords gas safety certificate)
This will give you the yearly profit of the property BUT don’t forget tax will need to be paid.
Some of the expenses of running the property are tax deductible, such as repayments of the interest on the mortgage and ground rent, therefore these can be taken off the taxable profit to work out how much will need to be paid in tax.
The laws governing what you can and cannot claim as a taxable allowance change regularly so make sure you investigate these throughly.
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