Converting Residential Mortgage to BTL

Roq

Hi all,
I am aware of the capital Gains Tax implications of doing the above, but what about the ongoing rental income vs expenses? Say i have converted my former own flat into BTL and moved out and pay rent elsewhere. Is there any way to deduct the rent I am paying from the rental income?
Many thanks for your help!
Roq

leveller2911

Roq wrote: »

Hi all,
I am aware of the capital Gains Tax implications of doing the above, but what about the ongoing rental income vs expenses? Say i have converted my former own flat into BTL and moved out and pay rent elsewhere. Is there any way to deduct the rent I am paying from the rental income?
Many thanks for your help!
Roq

I may be wrong but the rent and associated costs of renting out the BTL flat is all tax deductable but you can't claim back the rent on the place you move to and live in.

Remember that renting out your flat is a business and should be seen as such so you need all the associated insurances, gas safety certificates etc etc etc and remeber the flat is no longer your "home" its a commodity.

kingstreet

There are no capital gains implications of obtaining consent to let, or remortgaging to a buy to let product.

CGT will be payable on any gain you make from the point you start to let the property until it is sold, regardless of any mortgage arrangements thereon. There are exemptions/allowances for any time the property was your primary private residence.

You can offset any allowable expenses against the rental income for tax purposes, such as mortgage interest. You cannot offset the cost of rent you pay for alternative accommodation.

To remortgage you will need equity of 25% or possibly more ans typically a lender will want to see rent of eat least 125% of monthly mortgage interest assuming a mortgage rate of perhaps 6%.

dippy

Tax relief on Mortgage Interest for Buy-To-Let is being phased out. From next year, basic rate tax relief (20%) is being removed.

ExpertAdvice

Not al the lenders will allow you to convert your residential property to a BTL unless you are buying another residential property. Lenders would ask for proof of purchase for a new residential property.

You will not be owner occupier anymore as you would be renting and this is outside the criteria for quite a few lenders.

PBA

dippy wrote: »

Tax relief on Mortgage Interest for Buy-To-Let is being phased out. From next year, basic rate tax relief (20%) is being removed.

No it isn't. Under the new rules basic rate taxpayers will be able to offset the whole amount of costs. It's only higher rate taxpayers who won't be able to offset the whole amount.