Redemption penalty offset

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    Redemption penalty offset

    Under the new tax rules, can a redemption penalty (on the mortgage) be offset against rental income from the same tax year?

    #2
    See advice for entry in box 26 , given in the SA105 Notes ( 2018)

    https://assets.publishing.service.go...Notes-2018.pdf

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      #3
      There's not much real life experience, but I'd presume that the redemption penalty is a finance cost and therefore subject to the same restriction on relief as interest.
      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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        #4
        The finance costs that will be restricted include interest on:
        • mortgages
        • loans - including loans to buy furnishings
        • overdrafts

        Other costs affected are:
        • alternative finance returns
        • fees and any other incidental costs for getting or repaying mortgages and loans
        • discounts, premiums and disguised interest

        If you take a loan for both residential and commercial properties, you’ll need to use a reasonable apportionment of the interest to work out your finance costs for the residential properties. Only the finance costs for the residential property business are restricted. This also applies if your loan was partly for a self-employed trade and partly for residential property.


        https://www.gov.uk/government/news/c...tial-landlords

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