Allowable expenses against rental income

bugsy01

Due to continuing low interest rates I am considering using my cash to purchase a property to rent out. However I am unclear whether I would be able to claim my consequent loss of interest income (i.e the money I would have earned if the money was left invested in a building society) as an allowable expense against the rental income. Mortgage interest is an allowable expense but I would not have a mortgage.

If loss of interest is not an allowable expense this seems to penalise landlords for not having a mortgage! which would be a bit perverse.

Any advice or suggestions where to look greatly appreciated - Inland Revenue site etc don't seem to cover this issue.

Colincbayley

bugsy01 wrote: »

Due to continuing low interest rates I am considering using my cash to purchase a property to rent out. However I am unclear whether I would be able to claim my consequent loss of interest income (i.e the money I would have earned if the money was left invested in a building society) as an allowable expense against the rental income. Mortgage interest is an allowable expense but I would not have a mortgage.

If loss of interest is not an allowable expense this seems to penalise landlords for not having a mortgage! which would be a bit perverse.

Any advice or suggestions where to look greatly appreciated - Inland Revenue site etc don't seem to cover this issue.

Nice thought, but no you can not offset your loss of interest.

Jowo_2

Is this a wind up? You expect to be compensated for loss of interest on a bank account balance that you've withdrawn to invest in property? You get 10% tax relief for wear and tear, plus other deductible expenses associated with repairs, insurance and letting agents, plus you get greater rental income (because you've not got mortgage repayments eroding it).

Seriously strange logic, here. Since when is it up to the public purse to pay bank interest to someone whose spent the money out of it?! Ludicrous.

chucknorris

bugsy01 wrote: »

Due to continuing low interest rates I am considering using my cash to purchase a property to rent out. However I am unclear whether I would be able to claim my consequent loss of interest income (i.e the money I would have earned if the money was left invested in a building society) as an allowable expense against the rental income. Mortgage interest is an allowable expense but I would not have a mortgage.

If loss of interest is not an allowable expense this seems to penalise landlords for not having a mortgage! which would be a bit perverse.

Any advice or suggestions where to look greatly appreciated - Inland Revenue site etc don't seem to cover this issue.

Yes I claim this along with the mileage allowance to the moon and back where I meet the inland revenue to discuss such matters twice a month

Jowo_2

chucknorris wrote: »

Yes I claim this along with the mileage allowance to the moon and back where I meet the inland revenue to discuss such matters twice a month

Was the flag you planted at the moon tax deductible as a revenue item or was it considered a capital expense and expected to be offset against any future CGT liability?

chucknorris

Jowo wrote: »

Was the flag you planted at the moon tax deductible as a revenue item or was it considered a capital expense and expected to be offset against any future CGT liability?

Luckily I asked first and they said it was a capital expense so I didn't place a flag there for that very reason.

Jowo_2

chucknorris wrote: »

Luckily I asked first and they said it was a capital expense so I didn't place a flag there for that very reason.

Damn the HMRC for the complexity of a system that strangles the entreprenial spirit of those seeking a return on their investment, plus a return on the non-existent balance of their investment account, too.

clutton_2

i think the simple answer is "no"

silvercar

clutton wrote: »

i think the simple answer is "no"

I agree. Though there is nothing stopping you taking a mortgage to fund the purchase and claiming the interest as an allowable expense and then using your savings to generate interest. need to calculate if this is worthwhile.