Mortgage arrangement fees

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    Mortgage arrangement fees

    I am aware that remortgage arrangement fees etc. can be counted as an allowable expense, and I am also aware that purchase costs of a new property cannot be counted as an allowable expense.

    I cannot find out if the mortgage arrangement fees for a new BTL property can be counted as an allowable expense - can anyone point me in the right direction?

    #2
    If it's a personal purchase, they're allowable (they're allowable for a business too, just differently) - is the business already in being, with the new property being added to an existing portfolio, or is this the first property of a new business?
    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
      See Tax Return Notes - Form SA105 Notes for box 26:

      Box 26 Loan interest and other financial costs You can claim the costs of getting a loan or alternative finance to buy a property that you let, and any interest on such a loan or alternative finance payments. You can only treat the interest part of a mortgage payment as an expense. Capital repayments made on a repayment mortgage aren’t allowable expenses.

      Comment


        #4
        Both the purchase cost and the mortgage fees of the new property are allowable. However NEITHER is allowable against the old property, nore are they allowable against income. Both are only allowable when you come to sell the new property. They are allowable against capital gains, not against income.

        Comment


          #5
          Mortgage fees are not capital items, they are operating costs and are allowable against income.
          They're part of the new restricted (to 20%) allowance, along with mortgage interest.
          Same with any associated cost, like a lender's survey.

          The purchase cost is a capital cost.
          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


            #6
            Oops. It does seem that the loan is decoupled from the property, so whilst it is really an acquisition cost, HMRC doesn't see it that way.

            Comment


              #7
              For most accounting purposes funding isn't linked to the asset - lots of business loans aren't secured on a specific asset (although, obviously a mortgage is).
              But the funding can be replaced, paid off or added to without a new purchase (and, doesn't, for example, create a CGT event when a remortgage occurs).
              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

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