Mortgage interest payments before property let

arfur

I have recently been to see an accountant who advised that the mortgage interest payments could not be offset against rental income until the house had started to be let. In this case 5th July so for period 6th April to 4th July interest payments were not attributed to income tax.

I understood this, however he also advised that the interest payments for the property before it was let (which included the period noted above plus the previous full year whilst property was made ready for let) were not able to be set off against Capital Gains - is this right? I thought you could offset cost of improving property which included cost of mortgage etc whilst property was being made ready for let.

TM1976

You accountant is correct.

arfur

Thanks for the clarification, shame that it is dead money so to speak.

TM1976

You can set it off against rental profit, just not capital gains.

arfur

I thought you could only do that once property is let (or period in between lettings once property is let for the first time). Are you saying that could potentially offset interest payments before first let against income tax?

TM1976

arfur wrote: »

I thought you could only do that once property is let (or period in between lettings once property is let for the first time). Are you saying that could potentially offset interest payments before first let against income tax?

Yes , finance cost.