Claiming back more interest than the original purchase price of a property

Collapse
X
 
  • Filter
  • Time
  • Show
Clear All
new posts

    Claiming back more interest than the original purchase price of a property

    Hi

    This question concerns the amount of interest you can claim against expenses when you let out a property and how you can "re-set the clock" on your rental property.

    I know that it is possible to borrow UP TO the market value of a property AT THE DATE IT IS INTRODUCED TO YOUR LETTINGS BUSINESS.


    See the Inland Revenue's own guidelines - Example Two on the link below
    http://www.hmrc.gov.uk/manuals/bimmanual/BIM45700.htm

    In my case
    Property bought for 60k and rented out for five years
    Moved into property for two years and remortgaged it for 80k to purchase another property and then rented it out again.
    Q1 Does the clock re-set so I can claim up to 80k (ie more than the purchase price)
    Q2 I am now living back in the original (60k) property and want to remorgage it to 120k. If I move out in a year or so can I re-set the clock again and claim 120k interest on the rental property?

    Many thanks

    #2
    Originally posted by Simon Y View Post
    Q1 Does the clock re-set so I can claim up to 80k (ie more than the purchase price)
    Q2 I am now living back in the original (60k) property and want to remorgage it to 120k. If I move out in a year or so can I re-set the clock again and claim 120k interest on the rental property?
    I don't think the 'clock resets' at all - it's all about what you intend toi use the funds for. Ie, if you want to spend the £120K on wine, women and song then it's not claimable; but if it's to fund a new buy-to-let property then the interest on that loan could be offset against the income from the new property. I think.

    Comment


      #3
      Write a letter to hmrc and ask your question on max allowable interest .

      Comment


        #4
        Originally posted by Ericthelobster View Post
        I don't think the 'clock resets' at all - it's all about what you intend toi use the funds for. Ie, if you want to spend the £120K on wine, women and song then it's not claimable; but if it's to fund a new buy-to-let property then the interest on that loan could be offset against the income from the new property. I think.
        Thanks Eric,
        The money is being used to purchase another property that I will move into. I just wondered as I am reintroducing my property back into the rental business whether I will be able to claim back the full interest against tax?

        Comment

        Latest Activity

        Collapse

        • Reply to Is changing carpets to laminate flooring tax deductible?
          by Lawcruncher
          Funny how fashions change. Fifty years ago having fitted carpet had a social cachet, now everyone wants laminate flooring. I know it looks nice, but so do carperts. It is fine in a conservatory with cane furniture, but it makes a lounge look clinical. It also increases your central heating costs.
          30-05-2020, 07:51 AM
        • Is changing carpets to laminate flooring tax deductible?
          by anqi_z
          Hello,

          Carpets in a let property has worn out and I am considering to replace it with laminate flooring.
          Could anyone advise if this will be tax deductible (assume this won't be considered as improvement)?


          Thank you....
          25-05-2020, 19:16 PM
        • Flipping a property
          by Gray
          My son and I are thinking of buying a property together and renovating it. We were intending to rent it out but now are thinking about just selling it again once work is finished. If we purchase property in three names (our’s and his partner’s), we would get three capital gains allowances is that...
          18-05-2020, 17:53 PM
        • Reply to Flipping a property
          by Gordon999
          Land Registry only allows 4 names maximum on the property title.

          If more than 4 names , you would need to register under company name and the members in the group become shareholders.

          The members can be shareholders with one £1 share each and the company borrows the funds...
          30-05-2020, 05:59 AM
        • Reply to Flipping a property
          by jpkeates
          If the property title was a joint tenancy, anyone not contributing to the purchase would have received the ownership as a gift and would be an owner as a matter of fact.
          29-05-2020, 16:26 PM
        • Reply to Is changing carpets to laminate flooring tax deductible?
          by jpkeates
          OK, that makes a lot more sense.

          The HMRC guidance is focussed on improvements like new rooms or new bathrooms rather than more mundane changes.

          I would probably focus equally on the amount of the difference rather than the ratio - £500 is neither here nor there for tax purposes,...
          29-05-2020, 16:16 PM
        • Reply to Flipping a property
          by Stew
          thanks - interesting reading
          29-05-2020, 15:32 PM
        • Reply to Flipping a property
          by TaxAntics
          A good question! I read the post as being a purchase between a father, son and their partner and so assumed they'd all have an equitable interest. A partnership arrangement could easily have a variable profit sharing ratio that wouldn't necessarily follow equitable interests with partners’ capital...
          29-05-2020, 15:22 PM
        • Reply to Flipping a property
          by Stew
          A question if I may (not that I am disposing or buying but just sparked a question),,, is it enough to purchase the property in three names or do three names actually have to put funds into it at the point of purchase?

          If a property were bought by ten members of a family and all on the...
          29-05-2020, 14:38 PM
        • Reply to Is changing carpets to laminate flooring tax deductible?
          by TaxAntics
          That depends on how you choose to interpet HMRC guidance:

          However, where the new item is not substantially of the same standard/quality as the old item, the deduction is equal to the lesser of:
          • the cost of the new item
          or
          • the cost that would have been incurred if the old item had essentially
          ...
          29-05-2020, 13:32 PM
        Working...
        X