brown_a Posted April 25, 2006 Report Share Posted April 25, 2006 Hi again, more advice please. Is all the interest paid on a mortgage (eg buy to let) deductable agains the income or only a portion of it? From what I've read on sites incl the IR's site it seems that it's all deductable but that doesn't seem right. Eg. if using an interest only mortgage paying say, £500/month and getting rental £500 - no gain. Have I understood it correctly? Please help if you can. Many thanks Link to comment Share on other sites More sharing options...
Landlord Insurance Direct Posted April 27, 2006 Report Share Posted April 27, 2006 yes all the interest is deductable against income for tax purposes. it's like any other business, you have turnover(rent) less allowable expenses(mortgage interest, wear and tear, professional/agents fees, insurance costs) leaves you with the profit, no profit, no tax to pay! the tax/earning threshold before you start paying tax on your earnings is about £90 per week. hope that helps Link to comment Share on other sites More sharing options...
plym77 Posted June 1, 2006 Report Share Posted June 1, 2006 I agree Additionally, there has been a recent quirk which not all accountants have cottoned on to. You are allowed to claim mortgage interest up to the value of the property at the point you first let a property. Example. You puchase a property in 1990 for £50k, use it as a holiday home for yur family. In 2005, when the property is worth £200k, you decide to start to rent it out. Additionlly, you decide you want to buy a sports car for £100k (wouldnt we just love that) - you therefore take a mortgage of £100k on the property, spend it on the car, and claim the interest. Seems hard to belive huh, but the point has been argued and debated and it is true! The key is that you can mortgage up to 100% of the value of the property AT FIRST LET and spend it on what you like. So had the property been purchased and immediately let then the maximum you could claim mortgage interest on would be £50k. It is important to remember, that as the value of the property goes up, this will make no difference, it is at a particular point that the capital is measured. This is under the principal of capital accounts, and I wont bore you with the details but if you want more details, please let me know your circumstances Plym77 Link to comment Share on other sites More sharing options...
Recommended Posts
Archived
This topic is now archived and is closed to further replies.