Paying Off A Mortgage From Thailand

[Blake7]

get a regular mortgage but check the conditions should you choose to let. My RBOS mortgage charged a one off 50 pound fee in order to let the property but the low rate remained unchanged. I have also been renting with no problem through an agent and don't pay tax on rental income.

Thats a fantastic deal, if you have had a mortgage with the same company for a considerable amount of time this is very possible. I dont think that you could do this straight of the bat after getting a mortgage however. I may be wong.

Blake7 may i ask if your mortgage is in the UK and if so who with.

I'm also interested how you avoid paying tax on rental income if you are letting through an agent. (good for you that you do)

Thanks.

Lacoste.

Royal Bank of Scotland - I had it for about two years before I let the property.

When I rent through an agent I filled in a form saying I agreed to be paid rent without tax. I then filled in a form from Tax office (can't remember which one) sent it back to them and then in a couple of weeks got a reply that I did not need to pay tax on rental income.

Any idea why you weren't required to pay tax on your rental income? Do you think it was because your income fell beneath the UK tax threshold? Would be really useful if this is the case - I'm buggered if I want to give 22% to the taxman if I don't have to!

Also, why tell the mortgage company? I plan to keep paying the mortgage by direct debit, so why tell them? It's a legal requirement, I think, but how will they ever know?

well I am a non uk resident and get all money paid into an offshore account. Therefore no tax to pay. I think i put something in the tax form about the rental income saying that I expect to pay such and such over the year in maintainance etc (not that I have) which brought to amount down further. I had a financial chappy help me out with it all. Sorry I can't be of more help.

[Hadrian1]

get a regular mortgage but check the conditions should you choose to let. My RBOS mortgage charged a one off 50 pound fee in order to let the property but the low rate remained unchanged. I have also been renting with no problem through an agent and don't pay tax on rental income.

Thats a fantastic deal, if you have had a mortgage with the same company for a considerable amount of time this is very possible. I dont think that you could do this straight of the bat after getting a mortgage however. I may be wong.

Blake7 may i ask if your mortgage is in the UK and if so who with.

I'm also interested how you avoid paying tax on rental income if you are letting through an agent. (good for you that you do)

Thanks.

Lacoste.

Royal Bank of Scotland - I had it for about two years before I let the property.

When I rent through an agent I filled in a form saying I agreed to be paid rent without tax. I then filled in a form from Tax office (can't remember which one) sent it back to them and then in a couple of weeks got a reply that I did not need to pay tax on rental income.

Any idea why you weren't required to pay tax on your rental income? Do you think it was because your income fell beneath the UK tax threshold? Would be really useful if this is the case - I'm buggered if I want to give 22% to the taxman if I don't have to!

Also, why tell the mortgage company? I plan to keep paying the mortgage by direct debit, so why tell them? It's a legal requirement, I think, but how will they ever know?

well I am a non uk resident and get all money paid into an offshore account. Therefore no tax to pay. I think i put something in the tax form about the rental income saying that I expect to pay such and such over the year in maintainance etc (not that I have) which brought to amount down further. I had a financial chappy help me out with it all. Sorry I can't be of more help.

So you are paying tax.....but, like I said earlier, you are able to claim back certain things against your tax liabiltiy eg renting agent fees, wear and tear, you are even able to put your interest payments on the mortgage against the tax bill and claim for it. What you are saying seems to me like you are paying tax, but are able to lower the tax bill - maybe even making it negligible, by caliming things back againts it. These are the things you are able to put against the tax bill: Repairs and Mintenance; Financial fees ie interest on mortgage; Professional fees - ie renting agent, accountant; Council Tax if you pay it and not the tenant; Isurance;Stationery;Service charges - if it's a leasehold flat. There are more..... Effectively, you pay very little or even no tax if you play the game correctly.

[Blake7]

get a regular mortgage but check the conditions should you choose to let. My RBOS mortgage charged a one off 50 pound fee in order to let the property but the low rate remained unchanged. I have also been renting with no problem through an agent and don't pay tax on rental income.

Thats a fantastic deal, if you have had a mortgage with the same company for a considerable amount of time this is very possible. I dont think that you could do this straight of the bat after getting a mortgage however. I may be wong.

Blake7 may i ask if your mortgage is in the UK and if so who with.

I'm also interested how you avoid paying tax on rental income if you are letting through an agent. (good for you that you do)

Thanks.

Lacoste.

Royal Bank of Scotland - I had it for about two years before I let the property.

When I rent through an agent I filled in a form saying I agreed to be paid rent without tax. I then filled in a form from Tax office (can't remember which one) sent it back to them and then in a couple of weeks got a reply that I did not need to pay tax on rental income.

Any idea why you weren't required to pay tax on your rental income? Do you think it was because your income fell beneath the UK tax threshold? Would be really useful if this is the case - I'm buggered if I want to give 22% to the taxman if I don't have to!

Also, why tell the mortgage company? I plan to keep paying the mortgage by direct debit, so why tell them? It's a legal requirement, I think, but how will they ever know?

well I am a non uk resident and get all money paid into an offshore account. Therefore no tax to pay. I think i put something in the tax form about the rental income saying that I expect to pay such and such over the year in maintainance etc (not that I have) which brought to amount down further. I had a financial chappy help me out with it all. Sorry I can't be of more help.

So you are paying tax.....but, like I said earlier, you are able to claim back certain things against your tax liabiltiy eg renting agent fees, wear and tear, you are even able to put your interest payments on the mortgage against the tax bill and claim for it. What you are saying seems to me like you are paying tax, but are able to lower the tax bill - maybe even making it negligible, by caliming things back againts it. These are the things you are able to put against the tax bill: Repairs and Mintenance; Financial fees ie interest on mortgage; Professional fees - ie renting agent, accountant; Council Tax if you pay it and not the tenant; Isurance;Stationery;Service charges - if it's a leasehold flat. There are more..... Effectively, you pay very little or even no tax if you play the game correctly.

yes, i pay no tax at all and have a little piece of paper saying i ma tax exempt

[Super Hans]

get a regular mortgage but check the conditions should you choose to let. My RBOS mortgage charged a one off 50 pound fee in order to let the property but the low rate remained unchanged. I have also been renting with no problem through an agent and don't pay tax on rental income.

Thats a fantastic deal, if you have had a mortgage with the same company for a considerable amount of time this is very possible. I dont think that you could do this straight of the bat after getting a mortgage however. I may be wong.

Blake7 may i ask if your mortgage is in the UK and if so who with.

I'm also interested how you avoid paying tax on rental income if you are letting through an agent. (good for you that you do)

Thanks.

Lacoste.

Royal Bank of Scotland - I had it for about two years before I let the property.

When I rent through an agent I filled in a form saying I agreed to be paid rent without tax. I then filled in a form from Tax office (can't remember which one) sent it back to them and then in a couple of weeks got a reply that I did not need to pay tax on rental income.

Any idea why you weren't required to pay tax on your rental income? Do you think it was because your income fell beneath the UK tax threshold? Would be really useful if this is the case - I'm buggered if I want to give 22% to the taxman if I don't have to!

Also, why tell the mortgage company? I plan to keep paying the mortgage by direct debit, so why tell them? It's a legal requirement, I think, but how will they ever know?

well I am a non uk resident and get all money paid into an offshore account. Therefore no tax to pay. I think i put something in the tax form about the rental income saying that I expect to pay such and such over the year in maintainance etc (not that I have) which brought to amount down further. I had a financial chappy help me out with it all. Sorry I can't be of more help.

So you are paying tax.....but, like I said earlier, you are able to claim back certain things against your tax liabiltiy eg renting agent fees, wear and tear, you are even able to put your interest payments on the mortgage against the tax bill and claim for it. What you are saying seems to me like you are paying tax, but are able to lower the tax bill - maybe even making it negligible, by caliming things back againts it. These are the things you are able to put against the tax bill: Repairs and Mintenance; Financial fees ie interest on mortgage; Professional fees - ie renting agent, accountant; Council Tax if you pay it and not the tenant; Isurance;Stationery;Service charges - if it's a leasehold flat. There are more..... Effectively, you pay very little or even no tax if you play the game correctly.

That's very useful - thanks. Is it true you pay no tax on rented property if the income is less than the personal tax allowances (currently about £6k I think). I will have no other income, so hopefully the personal tax allowance rule will come into play, but am not sure if the rules are different if you are not a resident of the country.

[Blake7]

That's very useful - thanks. Is it true you pay no tax on rented property if the income is less than the personal tax allowances (currently about £6k I think). I will have no other income, so hopefully the personal tax allowance rule will come into play, but am not sure if the rules are different if you are not a resident of the country.

Yes the key is to be a non resident. I get about a thousand pound per month rent for the house minus the agency fees. No tax to pay. All my income is also non UK. My rental income goes into an offshore account. Not sure how it all happened but I signed a few forms my financial chum put in front of me. and that was that.

[Super Hans]

That's very useful - thanks. Is it true you pay no tax on rented property if the income is less than the personal tax allowances (currently about £6k I think). I will have no other income, so hopefully the personal tax allowance rule will come into play, but am not sure if the rules are different if you are not a resident of the country.

Yes the key is to be a non resident. I get about a thousand pound per month rent for the house minus the agency fees. No tax to pay. All my income is also non UK. My rental income goes into an offshore account. Not sure how it all happened but I signed a few forms my financial chum put in front of me. and that was that.

Cool. All I need to do now is find a financial chum...

[jezchesters]

OK - Speaking as someone who is currently doing this...

1. Get your mortgage from an IFA/Independant Mortgage Advisor. Don't mention anything about a Buy to Let. Once they have given you the mortgage, they really don't care

2. Make sure that the rental income outstrips your mortgage repayments sufficiently - if not, don't even think about it

3. Shop around letting agencies to get the best deal you can on a full management package. This way you never even have to have any contact with the tenants or visit the property

4. Tax. This does not even enter the equation. Even if you did had to pay it, you would only pay tax on the difference between the rent received and the mortgage paid. This almost certainly would not take you over your UK tax threshold. Even if it does, you can get a form from the Inland Revenue stating that you will not be in the UK for more than 180 days every year, making you UK tax exempt

In this way, you get your mortgage paid off for you, and earn a few quid into the bargain. Let the profit accumulate, as you have to account for periods of vacancy, repairs etc...

In my case - bought a flat with a normal mortgage. Monthly repayments are around 550GBP. I rent it out for 850GBP per month, but pay the letting agent 10% for full management, meaning I receive 765GBP per month. This leaves me with 215GBP per month profit. Obviously, insurance and the like has to come out of that, but it does me nicely. And the best thing is that someone is paying off my mortgage while I'm living in Thailand...

As I said, I can give you this information because I'm actually doing it. No problems with tenants as the agents deal with all of that for me...

I guess the biggest question for you is what is the rental potential vs mortgage liability in Scotland?

[Introspection]

how much is the property worth if you dont mind me asking?

the one's i'm looking at are about 100,000gbp. which in non-city centry parts of scotland actually gets you some ok property. not sure whether rent would outstrip mortgage payments though i'd need to see what rent i could expect on a property of that value.

[jezchesters]

Bought for 150k, but added a second bedroom so is now probably worth 190-200k (Property is located in Brighton...)

[cclub75]

In my case - bought a flat with a normal mortgage. Monthly repayments are around 550GBP. I rent it out for 850GBP per month, but pay the letting agent 10% for full management, meaning I receive 765GBP per month. This leaves me with 215GBP per month profit. Obviously, insurance and the like has to come out of that, but it does me nicely.

Perfect.

But what if... interest rates are going up ? Did you get a fixed rate for your mortgage ?

[jezchesters]

In my case - bought a flat with a normal mortgage. Monthly repayments are around 550GBP. I rent it out for 850GBP per month, but pay the letting agent 10% for full management, meaning I receive 765GBP per month. This leaves me with 215GBP per month profit. Obviously, insurance and the like has to come out of that, but it does me nicely.

Perfect.

But what if... interest rates are going up ? Did you get a fixed rate for your mortgage ?

No, I really can't see the value in them. Interest rates would have to have gone up 4 times in 2 years for it to have been worth taking a fixed/capped... After owning for 2 years (which is just about where I am now), you can then remortgage with the provider offering the best deal

Edited August 30, 2006 by jezchesters