You have to pay a certain amount of tax on the income you earn from your home, right? Well, it is a given. The amount of tax you have to pay on the income you earn depends greatly on several factors, such as the place you reside, the kind of income you receive, and the number of people dependent on you. To help you know the exact computation of tax applicable on your earnings, UK tax accountants can help you. Some of these tips are:
UK Tax Deduction Shall be used for Housing Loan
The housing loan is defined as the outstanding borrowings against your principal residence. You can avail of this tax deduction if you include the amount for repairing the house. For your clarification, exceptional borrowings do not necessarily mean that you need to buy something new; but it implies that you should repair or improve the existing dwelling.
Interest Paid on a Mortgage is not Deductible
Mortgage interest is the rate of interest paid on your house property. If you have an email mortgage, the email will determine the taxable amount. However, it is not taxable in the case of fixed interest rates. To know if the interest payment is deductible, you need to add up the amount of interest paid and the total income regarding the house property.
Interest on Credit Card Loans is also not Tax-Deductible.
The interest charged to the card company may vary, depending on the credit agreement. This is also true about the amount of interest paid on house property. It is essential to state that the entire interest paid is not necessarily taxable under UK tax laws.
A further exception to the above is the Stamp Duty.
Even though stamp duty is a charge, it is not a tax deduction. It only becomes a tax deduction when the total purchase price of the house is over a certain amount. The actual payment received must be within that limit.
Another exception to the above is Section 80c that Deals with Purchasing Residential Properties.
You can avail of a deduction to prove that the property was bought as an investment. In other words, the determination shall be satisfied if you can show that the property could earn you a profit. If you can prove this, the proof is enough to claim a deduction. In such cases, you can make an application to UK tax authorities and get it approved before paying the stamp duty.
There is one More Important Tax Benefit: It is the Property Rent.
You can claim a deduction based on your primary home as long as you can prove that the property rented out is your primary residence. This is known as the ‘principal’ residence. The process of claiming the deduction is quite simple. However, you need to make sure that you include taxes on the income earned from renting out the property.
If you are Looking Forward to Getting a House Loan in the UK
You may also consider claiming a section 12A credit. In this case, you will have to provide the necessary information to the lender about your disability. The details should relate to any impairment you might suffer due to your disability. However, this tax benefit does not apply to the personal property purchased with the help of a house loan. However, it is the best way to get house loans at lower interest if you buy residential properties.