tax returns

[zippy]

i wonder if any one can advise me please.

if you have a property and its going to be bought with a buy to let INTEREST only mortgage on it, are you able to claim the amount of the mortage as expenses. and if you have a repayment mortgage and that means only part of the morgage is interest could you claim just the interest part as expenses.i am abit confused as to how the tax situation works with propety and its not very helpful on the self assesment website. also what are the basic rules for expenses you can claim,when owning a property let out for rental. for instance,gas safety certificates and renewal of item in the house such as boilers and sanitary ware are they also liable to be put down for expenses, building insurance also as these all have to come out of the monthly rental surely they would be deductable from any money you made from renting out a property. i would appreciate any help or a link to a somewhere that shows what the costs are going to be so i can make an informed choice. thank you in anticipation.

[Carryon Regardless]

Tax on BTL falls into 2 categories. Revenue and Capital.

In general but not absolute expenses of purchase and development of a property prior to receiving rental revenue falls into the Capital category, and so is claimed against any capital appreciation at disposal.

The expenses of running the property (business) during the rental period are claimed against the Revenue.

It is only the interest applicable to any mortgage that may be claimed. Any portion that is a repayment portion is effectively serving as a profit as it increases your equity, for tax it is ignored.

Insurance and the cost of professional services are tax allowable. This will include legal, accountancy, gas & electrical inspection, EPC's and insurances.

[zippy]

Thanks for the reply, so just to check, if ALL the interest is deductable, surely it would make sense that that an interest only mortgage should ALWAYS be chosen when buying a property for rental , as a repayment or even buying for cash would not be deductable, or am i mssing something ? thanks

[Carryon Regardless]

I went % only on all but 1 a few years ago.

That was when I had belief that capital growth would be attractive and the retirement plan was to sell enough to pay off the others at some future point. Then the remaining rents(ish) would be the pension.

As things have transpired that is now far less likely and it may well be that my kids would have to wait to enjoy that principle, meanwhile the balance remains and the mortgage term will expire. I do still have choice to reduce the balance with available funds.

I comes down to how you perceive the future of yourself and the property market.

[zippy]

I went % only on all but 1 a few years ago.

Thae was when I had belief that capital growth would be attractive and the retirement plan was to sell enough to pay off the others at some future point. Then the remaining rents(ish) would be the pension.

As things have transpired that is now far less likely and it may well be that my kids would have to wait to enjoy that principle, meanwhile the balance remains and the mortgage term will expire. I do still have choice to reduce the balance with available funds.

I comes down to how you perceive the future of yourself and the property market.

yes i see what you mean, thanks once again for taking the trouble to answer my query.

[Richlist]

Just to add to COR's post......

* If you pay cash then there is no mortgage costs to offset against income.

* If you have a repayment mortgage then the mortgage lender will provide you with a breakdown to separate the interest & capital repayments. You can ONLY claim the interest payments.

If you are unsure about what costs you can claim then get an accountant to do it for you......at least for the first year. They are not expensive .....couple of hundred pounds max.

Start now by keeping all bank statements, receipts, invoices and records of payments.

If you have SPECIFIC questions I'll be happy to answer them.