claim void period from the day of purchase?

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    claim void period from the day of purchase?

    Hi

    I'm about to buy a buy-to-let property (my 5th), which needs a LOT of work. Need to do a loft dormer and re-model the house basically...so will take several months before it's ready to rent out. Maybe 4-5 months.

    During the void period starting from the day of purchase, can I claim the mortgage interest payments against tax, even though it's never been let out prior?

    Best

    K

    #2
    Yes, it's a valid business expense.
    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


      #3
      great thanks! So do I have to do anything in particular to prove it's a BTL from day one to the taxman (since the first tenant won't move in until Spring 2015)?

      Best

      K

      Comment


        #4
        All explained in your Self Assessment form which you will need to complete and in particular the part re Income from Land & Property, very straight forward.. Just make sure you keep a complete record of expenditure and income , and remember if you incur a loss this can be carried forward into the next financial year.

        Comment


          #5
          Qualifying pre-renting expenditure is allowable for up to 7 years. Such expenditure is deemed to have occurred on the first day of the letting business.

          Also, it is important to correctly analyse the refurbishment expenditure into capital and revenue - only the latter is deductible for Income Tax purposes.

          Comment


            #6
            You might consider it more tax efficient to let the property for 6/12 months (if you can?) before replacing old fixings and fitting with the modern equivalent...

            Assuming it's not overly contentious you can then claim those repair costs against income this year rather than waiting until you sell and offsetting against CGT. Depending on your tax bracket that could be the difference between 40% and 28% not counting the capital erosion of the 'repair' costs caused by inflation between now and when you sell the property.

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