Remortgage ERC as financial charge

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  • Remortgage ERC as financial charge

    Hi,

    I remortgaged a flat in July and started letting it from September.
    When I remortgaged, the lender charged me Early Repayment Charge of £2,505.

    Could anyone advice me whether ERC can be claimed as financial charge of the tax year?

    Many thanks!

  • #2
    Was the early repayment charge wholly and exclusively a cost of your rental business?

    Comment


    • #3
      Thanks for your response JaneK2011.
      I cannot decide whether it is or isn't.
      I had to take out the remortgage out to make initial capital for buying house and letting the flat out. The whole purpose is to start the rental business.

      Comment


      • #4
        If the remortgage was to buy yourself a property for you to live in then I don't believe that is wholly for your rental business. I know it is related as you couldn't have had a rental business if you didn't buy yourself somewhere to live but you personally benefited too.

        As you are allowed to remove capital from your business, I'm prepared to be corrected on this matter. However your business had not yet started.

        Comment


        • #5
          I understand where you are coming from although I don't think it matters whether my property investment business started or not as you can claim expenses which you spent prior to business commencement.

          Comment


          • #6
            I understand you can incur expenses before the busines begins but I don't know if you can withdraw capital from a business that doesn't yet exist. Therefore I still believe the expense doesn't pass the 'wholly and exlusively' test. It might be worth consulting an accountant.

            Comment


            • #7
              Thanks JaneK2011.
              I will check up on financial adviser and accountant.

              Comment

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