Rental Property Relief

[ElizabethCat]

We have two rental properties that my husband bought as his retirement plan.

Now with the new reduction in tax relief, I'm just wondering how much I would pay. If the difference between the rental income and interest relief allowed is 6000, how much tax do I actually need to pay?

Also these properties are now in negative equity, if we decide that it is no longer a viable option can you just hand the keys to the bank or do you have to sell them and remain with a mortgage and no property??

Thanks,

Elizabeth

 

[elcato]

I don't understand your first question. Are you saying that when you deduct the annual interest on your properties from the total annual rent you are left with 6k? Have you deducted other liabilities such as management fees, insurance, maintenance, upkeep etc ? As an example say you have a rent of 10 p.a. and your interest paid for the year on the mortgage is 6k then you can deduct 75% of the interest i.e. 4.5k from this so that you are now liable for tax on 5.5k less other expenses (see above).
As regards the second point handing in the keys would be foolish (imo) as you will always be liable for the original loan amount. The bank will just sell them for whatever they can and then bill you for the rest outstanding including interest on arrears. If you want to cut your losses I suggest selling then yourself and yes have the remainder outstanding plus no properties.

 

[Nalah]

to clarify;

are these properties in your pension fund (as part of a self directed PRSA)?