Allowable expenses against rental income

rogerfrere-smith

I purshased an old property 2 years ago with the aim of renovating it, splitting it into flats and letting them out. This I have done and the rental income has been coming in for the last 6 month's. The purchase money for the house was raised against my own home through a remorgage.
As I have been paying the mortgage interest for over 2 years now can I claim that interest against the rental income in this tax year ?
Any help would be greatly appreciated.

anselld

If the money was raised exclusively to fund the BTL purchase and renovation then yes you can claim the interest.

kingstreet

Here's a guide to the allowable expenses;-

http://www.direct.gov.uk/en/moneytaxandbenefits/taxes/taxonpropertyandrentalincome/dg_10014027

AFAIK the mortgage interest should be offset against rental income in the year in which both were paid.

Have you accounted for your income and expenses in your first letting year yet?

anselld

http://www.hmrc.gov.uk/manuals/pimmanual/pim2505.htm

"Qualifying pre-commencement expenditure is treated as incurred on the day on which the taxpayer first carries on their rental business. This is deducted, together with the other allowable expenses of letting, from the total receipts of the business for that year."

tbs624

LLs should always get oit straight from the horse's mouth and go straight to the HMRC website, checking out the Property Income Manual, as anselld has linked to. See also HMRC's Form SA105 and its related helpages

kingstreet

Yep. That's what I thought.

I'm trying to establish if the OP declared his property income and expenditure in his SA return which should have been filed by 31/01/12 for the 2010/2011 tax year. I believe that would be the first opportunity for a property purchase and first let from two years ago.

theartfullodger

Roger:

Welcome to MSE...

Suggest you use a different ID in future as with your name your home address & that of the property in question is easily identified...

(No offence but..) hope you are usually more careful with personal information....