This will reduce further the problems associated with letting. Letting a property in a less desirable area may be difficult so it could remain empty for several months, thereby reducing the annual yield. If necessary, be prepared to look further afield to find a property that will secure good returns. The tax position for rented property is divided into two parts. Income tax is payable each year on the profit generated after the ongoing expenses associated with the property are deducted.
Capital gains is calculated on the gain made when the property is sold.
This is after the owner's annual exemption for Capital Gains tax in the year of disposal has been taken into account. Should a problem arise with payment of rent or failure of a tenant to move out at the end of the tenancy, it is essential to take quick and decisive action. Any delay could be seen as a sign of weakness, encouraging your tenant to take advantage and stay put. So before choosing one, establish what procedures they use for instigating possession proceedings and chasing rent arrears. They will be beneficial if there are problems with the condition of the property.