High tax on rental income ahead of retirement?

[moneymakeover]

Is it common that before retirement the tax payable on the rental income will be a burden?


After retirement when paye income drops and pension not huge, the tax due on rental income will drop? Because overall income will be lower. Might be say grossing 36k per year: pension plus rental income combined.

 

[moneymakeover]

I suppose one reason the tax is high is because the interest deduction drops over time

But i guess there is no escaping death and taxes

 

[Sarenco]

Eh, if your income drops then so does the amount of income tax you have to pay.

No mystery.

 

[moneymakeover]

The point I'm trying to make is if i were to continue paying 50% to government I would give up,

However with onset of retirement it will make it slightly better.

Hopefully in retirement the effort and tax paid will be justified.

 

[DeeKie]

Well if it’s your only income yes that’s right.

 

[moneymakeover]

Well it won't be the only income
There will be state pension
And private pension

 

[Gordon Gekko]

It’s common enough, but it obviously depends.

Very few people’s retirement income is the same as their employment income.

It’s always important to be smart about which spouse has the assets and income to maximise 20% rate bands.