Remortgage fees and tax

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    Remortgage fees and tax

    I've read various threads and not quite got an answer to a question that is relevant to me at the moment.

    I'm aware that mortgage fees can be claimed as a revenue item for tax. I'm also aware that different people suggest the fees should be either amortised over the life of the loan or should be claimed in the year they were incurred (I'm keen on using the latter method).

    Take this as an example:
    £100k loan taken out in 2011.
    £100k remortgaged in 2015, £2k fee, added to loan
    £102k remortgaged in 2017, £1k fee paid up front
    £102k mortgage ongoing.

    Prior to this tax year, I have only ever claimed mortgage interest on my tax return as a cost.

    Q1. Should I have claimed £2k as a cost in 2015? If yes, then can I claim it this year or have I lost the opportunity?
    Q2. Can I validly claim £1k this year?


    There are multiple answers because there are different interpretations of the rules.
    Complicated by the changes in the allowance for interest and associated fees.
    There's a real difference between the text book answer and what everyone does and there are different mechanisms that landlords use to calculate income, costs and tax (cash or accounting).

    As you're probably claiming the interest on the 2015 fee as part of your allowance, you could probably claim the fee over the term, as a 2015 cost (which has gone unless you change your 2015 tax return) or take the cost when you actually pay it when the mortgage is paid off.
    If you use the accounting method, the "correct" answer is to spread it over the mortgage term, but I would guess everyone claims it in the year paid.

    The 2017 fee was actually paid, so it's either amortised (right answer) or claimed now (what everyone does).

    Amortising is less appealing for higher rate tax payers, because the allowance is now being capped.
    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).


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