Tax deductions for mortgage interest & refurb. costs

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    Tax deductions for mortgage interest & refurb. costs

    Good afternoon.

    This is my first post so hope I am doing this right.

    Can someone please advise me on the following.

    I bought and lived in a property for 5 years but due to a relationship breakup, I decided to rent the property out to a private tenant and have been doing so for just over a year.

    I am just about to submit my tax details but I need to confirm I have everything correct as after reading so many publications, internet searches, im becoming confused.

    Can I claim the full interest charge on my mortgage for the year which is on a buy to let mortgage? Some are saying only 75%, others are saying the full amount. (Please note my mortgage is on an interest only basis)

    I left my house fully furnished such as curtains, electrical items, full furniture etc, all the tenant did was move herself and her clothes in. I do not know what the full cost would have been for all the items, as they had been bought within the 5 years but did not save any receipts etc. Personally, I did not want to take any furniture with me and start afresh. I have been told I can claim 10% per calender month of my rental income for the furtniture. Is this correct?

    I actually took a £10k person loan out a year before I decided to rent out to do some work on the property (took an old gas fire out, blocked up chimney etc, replaced a new boiler system in the property, fully carpeted the house and block paved the front garden). Is there any way I can claim against this loan or is this too late, as unfortunately im still paying for it, but im annoyed at myself because it all went on the house to completely gut but my personal circumstances changed the following year. Im not sure how this works due to it being a personal loan and again I have no receipts only pictures of what I took of the house before and after as in the upheaval I dont know where I have placed the receipts. STUPID I KNOW ;o(

    I hope someone could offer me some advise.

    Many thanks for taking the time to read this.

    Emma

    #2
    Wrong section - Try the tax section! or wait for it to be moved!
    [I]The opinions I give are simply my opinions and interpretations of what I have learnt, in numerous years as a property professional, I would not rely upon them without consulting with a paid advisor and providing them with all the relevant facts[I]

    Comment


      #3
      Originally posted by Emma05 View Post
      Can I claim the full interest charge on my mortgage for the year which is on a buy to let mortgage? Some are saying only 75%, others are saying the full amount. (Please note my mortgage is on an interest only basis).
      Yes, the full amount of an interest-only mortgage

      I have been told I can claim 10% per calender month of my rental income for the furtniture. Is this correct?
      Yep. ie, 10% of your annual rent received. That way the value of the original items you bought is immaterial.

      I actually took a £10k person loan out a year before I decided to rent out to do some work on the property
      No, capital expenditure undertaken prior to first renting the property out is not an allowable expense. Nor is interest on the loan. (If you had already been renting when the expenses were incurred, one or two items might have been allowable, but most - as they were for bettering the property rather than maintaining it - would not).

      There are other items you can claim for, eg insurance, and other expenses incurred in your business of property letting.

      That's my take on your situation but wait for someone else to confirm I'm right before rushing off to submit your tax form!

      Comment


        #4
        Originally posted by Ericthelobster View Post
        No, capital expenditure undertaken prior to first renting the property out is not an allowable expense. Nor is interest on the loan.
        Capital expenditure prior to first renting the property is capital expenditure and thus deductible against the capital gain when you eventually sell.

        Perhaps you would explain why you think the interest is not deductible?

        The interest is on a loan that is obtained wholly and exclusively for the property in question; interest on it is thus deductible.

        Comment


          #5
          Telometer

          Are you saying the interest on the loan is deductable? I am still currently paying for the loan but my downfall is I didnt get the loan against the property at the time, because I did not know I was going to rent it out just under a year later.

          Do you think I would be better going to see an accountant over this or can I do this myself and work it out, which I can do but I want to make sure everything is correct.

          Sorry to be a pain!

          Emma

          Comment


            #6
            Try phoning your tax office. I have asked about things I could offset against rental income, and they have always been helpful.

            Comment


              #7
              I don't see why the interest on the loan shouldn't be deductible. It is the purpose of the loan that counts. You took out the loan wholly & exclusively for the purpose of improving the property.

              Comment

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