Anne Murray is planning to buy a rental property, in addition to the family home she and Henry own. She is considering a property in Bristol costing £210,000. She has savings of £85,000 which she will use as a deposit but will need to borrow the remaining amount for the purchase. She has had a fixed-rate mortgage agreed in principle by Royal East Bank, for which she will be charged 4.75% interest. She wants to know what income she might expect to get on her investment. Local agents have estimated that the monthly rent may be £1,450 per month, with agent's fees for managing the property being charged at 5% of the rent. Provide Anne with an estimate of the relevant costs of renting the property and the net rental income that she might expect to get. Anne has estimates for some of the other costs she will incur as follows: Repairs and maintenance per year £700 Property insurance per year £395 Mortgage arrangement fee £1950 Surveyors' fees £350 Solicitors' conveyancing fees £1050 Gardener £870 Explain to Anne what tax will be payable when she buys the property. Calculate the tax that she will have to pay.
Anne Murray is planning to buy a rental property, in
addition to the family home she and Henry own. She is
considering a property in Bristol costing £210,000. She
has savings of £85,000 which she will use as a deposit but
will need to borrow the remaining amount for the
purchase. She has had a fixed-rate mortgage agreed in
principle by Royal East Bank, for which she will be
charged 4.75% interest.
She wants to know what income she might expect to get
on her investment. Local agents have estimated that the
monthly rent may be £1,450 per month, with agent's fees
for managing the property being charged at 5% of the
rent.
Provide Anne with an estimate of the relevant costs of
renting the property and the net rental income that she
might expect to get. Anne has estimates for some of the
other costs she will incur as follows:
Repairs and maintenance per year
£700
Property insurance per year
£395
Mortgage arrangement fee
£1950
Surveyors' fees
£350
Solicitors' conveyancing fees
£1050
Gardener
£870
Explain to Anne what tax will be payable when she buys
the property. Calculate the tax that she will have to pay.
Step by step
Solved in 2 steps
