Accounting
Rental Profit Calculator Explained
How rental profit is calculated for tax, and how allowable expenses shape your bottom line.
The Landvale Team·Updated 1 July 2026·6 min read
Key takeaways
Rental profit = rental income minus allowable expenses.
Mortgage interest is not a deduction for individuals — it's a 20% credit.
Capital costs never appear in the profit calculation.
You can offset a rental loss against future rental profits.
Landvale's Landlord Tax Estimator models it live from your ledger.
The rental profit formula
Rental profit = rental income − allowable revenue expenses. Mortgage interest is then handled separately as a 20% tax reducer, not as an expense.
A worked example
£16,800 annual rent. £4,200 allowable expenses. £6,000 mortgage interest. Rental profit before S24 = £12,600. Higher-rate tax on that = £5,040. S24 credit = £1,200. Final tax on rental = £3,840.
Landvale's live rental profit view
Landvale shows rental profit per property, per portfolio, live — with the Section 24 impact broken out, and the estimated tax updated in real time as you categorise transactions.
Pillar guide
The Complete Guide to Landlord Accounting
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Frequently asked questions
Individual landlords get a 20% tax credit on interest — not a deduction. Companies deduct in full.
