Rental Income Tax Calculator
Calculate tax on rental income after deducting allowable expenses (mortgage interest, repairs, insurance, management fees) and depreciation.
Frequently Asked Questions
What rental income expenses can I deduct for tax purposes?
Allowable rental deductions typically include: mortgage interest (or a 20% credit in the UK), letting agent fees (10–15% of rent), repairs and maintenance, buildings insurance, landlord liability insurance, accountancy fees, ground rent and service charges, and travel to the property for management purposes. Capital improvements (adding a new bathroom) are not deductible — only like-for-like repairs are.
How is rental income taxed in the UK in 2024/25?
UK landlords add net rental profit to other income and pay income tax at 20%, 40%, or 45%. Since April 2020, mortgage interest is no longer fully deductible — landlords get a 20% tax credit on finance costs instead. Furnishing costs use the Replacement of Domestic Items Relief. The £1,000 Property Allowance exempts very small rental income.
How is rental income taxed in the US?
US landlords report net rental income on Schedule E. Allowable deductions include mortgage interest, property taxes, insurance, repairs, depreciation (over 27.5 years for residential property), management fees, and HOA dues. Depreciation recapture (taxed at 25% max) applies when you sell. Passive activity loss rules may limit deductions if your adjusted gross income exceeds $100,000–$150,000.
What is negative gearing and how does it reduce tax?
Negative gearing (common in Australia) is when rental expenses exceed rental income, producing a net rental loss. This loss can be offset against other income (salary, investment income), reducing your total taxable income and overall tax bill. Australia's 50% CGT discount also applies when you eventually sell a property held for over 12 months.
Do I have to pay tax on rental income below a certain threshold?
In the UK: if total rental income is ≤ £1,000 per year, the Property Allowance means no tax is due and no return is needed. In the US: rental income is always taxable, but passive loss rules and deductions often reduce or eliminate the net taxable amount. In Australia: rental income is declared in your tax return regardless of amount.