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[quote][i]Originally posted by James[/i] OK I've done the sums. This assumes a 25% deposit (usually the minimum), I've based it on local property prices and associated rental incomes and assumed a 20% income tax rate. I know you can offset mortgage interest and maintenance costs against the taxable rental income, I've estimated that to be about £400. I've also assumed a mortgage rate of 5%. All of this results in a small monthly loss (£68), which is manageable for the long term benefits. However, once you consider the 40% tax bracket, you'll lose £228 a month. Purchase Price £250,000 Deposit £62,500 Loan Amount £187,500 Interest Rate 5% Repayments £1,108 Rental Income £1,200 Offset Amount £400 Taxable Rental Income £800 --------------------------------------------------------------------- Income Tax Rate 20% Offset Amount + Post-Tax Rental Income £1,040 Monthly Profit/Loss -£68 --------------------------------------------------------------------- Income Tax Rate 40% Offset Amount + Post-Tax Rental Income £880 Monthly Profit/Loss -£228 P.s. Yes I'm bored. [Edited on 23-08-2012 by James] [/quote]
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