Interest on property loans

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    Interest on property loans

    Hello all,

    Just after a simple yes or no answer really, although if there is more to it than I realise, then please do let me know!

    On the government tax pages concerning rental income, 'interest on property loans' is listed as an allowable expense. Does this include my monthly mortgage payment? It is an interest-only but to let mortgage.

    Many thanks, John.

    #2
    Unfortunately cannot post a reply with less than 10 characters. The answer is Yes.

    Comment


      #3
      Thank you kindly sir!

      John

      Comment


        #4
        Originally posted by Johnr12 View Post
        Hello all,

        Just after a simple yes or no answer really, although if there is more to it than I realise, then please do let me know!

        On the government tax pages concerning rental income, 'interest on property loans' is listed as an allowable expense. Does this include my monthly mortgage payment? It is an interest-only but to let mortgage.

        Many thanks, John.
        Based on your question, it appears that you may be new to letting and therefore not fully aware of all the expenses you are eligible to claim. If so, you are best to make sure by seeking professional advice.

        Ramnik
        Private advice is available for a fee by sending a private message.

        Comment


          #5
          Hi

          Quick question - I understand that I/O mortgage payments can be offset against rental income.

          What is the case if the mortgage has been paid off? Can a nominal amount be used to represent the opportunity cost of the free equity? For example, if a property had been purchased for £200k, could financing costs of 5% (£10k) be used as a tax-deductible?

          Or would it be better to actually release as much equity as possible?

          Hope I've been clear?

          Comment


            #6
            Originally posted by fabs View Post
            Hi

            Quick question - I understand that I/O mortgage payments can be offset against rental income.

            What is the case if the mortgage has been paid off? Can a nominal amount be used to represent the opportunity cost of the free equity? For example, if a property had been purchased for £200k, could financing costs of 5% (£10k) be used as a tax-deductible?

            Or would it be better to actually release as much equity as possible?

            Hope I've been clear?
            (1) You cannot claim any expense which has not been incurred, ie there is no claim for notional interest where you chose to pay off your BTL mortgage.

            If we turn the tables, if you choose to leave your £20,000 income job, would you still expect to be taxed on £20,000 income each year when you are no longer earning this amount?

            (2) Would it be better to actually release as much equity as possible? Do you mean that you want to borrow even more money? It depends on what you want to use the money for? Horses for courses.

            If the lender is charging you 7% interest, would it make sense to put the money raised on deposit at 4%? But if you use the money raised to buy another BTL and get rental income yield of say 9%, perhaps worth considering?

            Ramnik
            Private advice is available for a fee by sending a private message.

            Comment

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