Second house - Tax

Cleaver

Fuzzythinking wrote: »

No offence taken, I want to be 100% sure that I did not miss out anything important. I have a clear idea what to do next. In fact, I am glad that you worked out the expense which clearly help me very much. For my morgtage, I am lucky to have family support to give me a direction which morgtage I should. In the mean time, I never stop learning new things every day. Since I have asked the question which I have learnt from you and I have been a fool for 5 mins!

I feel a bit bad now, apologies if I was harsh.

In terms of the figures I used above, you'll find as a landlord that you'll have good years and bad years. You may have a period of 18 months were nothing breaks down, you have a great tenant and have no extra expenses. Then you might have 12 month period where you have a three month void, the roof needs fixing, the toilet needs replacing and a tenant doesn't pay one month for one reason or another. So the figures I used above are just an example. During the rental of a property I had the washing machine door needing replacement, the back porch doors needing fixing, some roof tiles needing replacing, a blocked chimney, the ariel stopped working and the toilet flooding the bathroom. All these cost money to fix, but we were very lucky and had no voids for four years and great tenants. You need to do your own business plan and try and think of every expenses and how often you think you'll need to pay them.

Good luck whatever you choose to do.

Fuzzythinking

Cleaver wrote: »

I feel a bit bad now, apologies if I was harsh.

In terms of the figures I used above, you'll find as a landlord that you'll have good years and bad years. You may have a period of 18 months were nothing breaks down, you have a great tenant and have no extra expenses. Then you might have 12 month period where you have a three month void, the roof needs fixing, the toilet needs replacing and a tenant doesn't pay one month for one reason or another. So the figures I used above are just an example. During the rental of a property I had the washing machine door needing replacement, the back porch doors needing fixing, some roof tiles needing replacing, a blocked chimney, the ariel stopped working and the toilet flooding the bathroom. All these cost money to fix, but we were very lucky and had no voids for four years and great tenants. You need to do your own business plan and try and think of every expenses and how often you think you'll need to pay them.

Good luck whatever you choose to do.

Please do not feel bad, you are simply giving me a lot of education and be aware of these expenses and time-consuming to fix the faulty. I will go away and try to work out much I need to offset my expenses and come back here if I need your advice.

Again you have been fantastic and I found this forum very educational. Thank you

Regards

FT

tiernsee

This has been a very interesting thread and I have also learned a lot.

Just a quick question to those who understand these things. I am thinking of buying a second property to let as a very long term investment. It would be financed via a mortgage on the property where I live (and will continue to live) - however, I am unclear if I can claim the interest part of these mortgage payments as an expense to offset against the rental income from the other property which I would own outright? I do understand about capital repayment parts not being an allowable expense. Any advice, please?

Many thanks for your help.

scarletjim

EDIT: IGNORE - THIS WAS WHAT I HAD BEEN TOLD ELSEWHERE - TURNS OUT IT WAS INCORRECT - COULD BE GOOD NEWS FOR ME

I'm pretty sure you wouldn't be able to make any deductions for that I'm afraid, as technically the mortgage would not be against the rented property. Sorry!

If this were allowed surely everyone would do it, as remortgage interest rates are much lower than Buy To Let interest rates...

m_13

tiernsee wrote: »

This has been a very interesting thread and I have also learned a lot.

Just a quick question to those who understand these things. I am thinking of buying a second property to let as a very long term investment. It would be financed via a mortgage on the property where I live (and will continue to live) - however, I am unclear if I can claim the interest part of these mortgage payments as an expense to offset against the rental income from the other property which I would own outright? I do understand about capital repayment parts not being an allowable expense. Any advice, please?

Many thanks for your help.

Absolutely. A mortgage can be secured on any property so long as there is a clear link between the loan and the purchase of the BTL. We have a small mortgage on our own home which paid for a BTL flat. We have no mortgage on the BTL flat.

You can also only have the mortgage for the value of the property when you first bring it into the rental business so you can't buy a BTL property for £100k, get a mortgage for £150k on your own property and claim all of the mortgage interest

If you have an interest only mortgage on your home then all of the monthly payment will be tax deductible. However, you would need to be certain that the value of the BTL property would pay off the debt at some point.

We have insurances on the mortgage (life, sickness etc) which is a tax deductible expense on the rental business as 100% of the mortgage is linked to the BTL flat.

m_13

scarletjim wrote: »

I'm pretty sure you wouldn't be able to make any deductions for that I'm afraid, as technically the mortgage would not be against the rented property. Sorry!

If this were allowed surely everyone would do it, as remortgage interest rates are much lower than Buy To Let interest rates...

Untrue. You can secure the mortgage against any property. However, you need to have the equity in your own property which is a barrier for lots of people.