Expenses off-set against income tax

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    #16
    aha.. that sounds like a plan. problem is I recently signed a re-mortgage for capital and interest. will see if they willing to change to interest only. alternatively sell the property. I was previously on an interest only at a worse rate and wanted to re-mortgage to a capital mortgage to pay loan of sooner. perhaps that was the mistake. should stick with interest. The property made decent equity even on the interest only mortgage.

    Comment


      #17
      It depends on your time scale - there's nothing fundamentally wrong with using rent income to create equity.
      It's just a longer term plan.

      If you sell you'll probably have the same early term penalty as changing product.
      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).

      Comment


        #18
        Originally posted by xenoid View Post
        monthly rent 1250 ... buy-to let mortgage 873.12 - certificates (elec, gas, PAT, Fire and risk, EPC), maintenance and repairs, council landlord licence costs, service charges, landlord insurance.... all of these quickly erode the rental income.. mortgage is high since is an overseas Buy to let mortgage... any good advise?
        Does this £873.12 include the Capital repayment element of your mortgage or is it just the interest?
        Are you aware you can't claim tax relief on the Capital element. If it does include the capital repayment, then you aren't losing this money but paying equity into your property.

        It is concerning that you expect HMRC to make a cash payment for your losses.

        You should sell.

        Comment


          #19
          You have had some exceptional repairs bills e.g. electrics.

          Sellers are getting a good price. Not a bad time to sell.



          Comment


            #20
            Originally posted by xenoid View Post
            jpkeates,

            Indeed its a capital repayment mortgage at 3.09% (very high i know) .. not many lenders will to remortgage for overseas BTL at a good rate.. value of property is £330 000 and Rent £1250 increasing to £12750 in august... still not good enough for expenses. So I will sell the property.
            recent electrical re-wiring set me back £4000 as well.
            Interest rate charged at 3.09% is about 1% higher compared to 2% interest rates paid by local borrowers. If your mortgage loan is £200K, your annual interest is costing around £6,180 .
            If your rental level is £1250 per month, your rental income will be £15K .

            So roughly, your operating expenses will be around £5K and estimated profit will be £10K .
            If you carry a UK or EU passport, you can claim the personal allowance and no tax is payable.
            If you don't qualify to claim for personal allowance , then your tax on annual profit of £10K will be £2K.

            I am not sure if non-residents can claim tax credit for 20% on the £6180 loan interest = £1236. which can reduce the tax bill from £2K less £1236 to £764.approx.

            The repayment mortgage of £873 per month includes £6180 loan interest and £4200 repayment of capital towards reducing the mortgage loan.

            Comment


              #21
              Originally posted by xenoid View Post
              aha.. that sounds like a plan. problem is I recently signed a re-mortgage for capital and interest. will see if they willing to change to interest only. alternatively sell the property. I was previously on an interest only at a worse rate and wanted to re-mortgage to a capital mortgage to pay loan of sooner. perhaps that was the mistake. should stick with interest. The property made decent equity even on the interest only mortgage.
              Interest ONLY mortgages need to be banned

              Comment

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