Landlord tax deduction for mortgage interest (20% band)

jcuurthht

Hello,

Am I right to assume the following point on this page can refer to a mortgage:

interest on property loans

https://www.gov.uk/renting-out-a-property/paying-tax

Therefore if I pay 500 a month and 200 of that is interest, I can clam 20% of that 200 as tax relief?

[Deleted User]

jcuurthht wrote: »

Hello,

Am I right to assume the following point on this page can refer to a mortgage:


https://www.gov.uk/renting-out-a-property/paying-tax

Therefore if I pay 500 a month and 200 of that is interest, I can clam 20% of that 200 as tax relief?

One supposes that that would be reasonable if the loan was on an interest only basis with the rate not changing i.e. you can currently claim £200 as an expense against your rental income. (the whole world changes on this from 2017/18)

However, if on a repayment basis when each repayment reduces the capital and, therefore, interest it would be necessary to obtain some kind of certificate/documentation from the lender to determine just how much interest was paid in the financial year.

jcuurthht

[Deleted User] wrote:

One supposes that that would be reasonable if the loan was on an interest only basis with the rate not changing i.e. you can currently claim £200 as an expense against your rental income. (the whole world changes on this from 2017/18)

However, if on a repayment basis when each repayment reduces the capital and, therefore, interest it would be necessary to obtain some kind of certificate/documentation from the lender to determine just how much interest was paid in the financial year.

The mortgage is neither buy-to-let nor interest only. It's actually the mortgage I had when I lived in the property; I just got a permission to let from the lender. And it actually just ended so I've been bumped to SVR, and I can't change it.

Thanks for the advice.

Cook_County

Currently mortgage interest on a residential rental is a deduction from profits, using GAAP. From 2017 this will cease and the relief will be a reducer against any overall tax liability.

CLAPTON

jcuurthht wrote: »

Hello,

Am I right to assume the following point on this page can refer to a mortgage:


https://www.gov.uk/renting-out-a-property/paying-tax

Therefore if I pay 500 a month and 200 of that is interest, I can clam 20% of that 200 as tax relief?

well no

you claim the total yearly interest paid as an expense
if you are a 20% rate payer payer then it reduces your actual tax by 20% of the interest paid.

jcuurthht

CLAPTON wrote: »

well no

you claim the total yearly interest paid as an expense
if you are a 20% rate payer payer then it reduces your actual tax by 20% of the interest paid.

Thanks. That makes sense.

Perhaps it would be worth hiring an accountant.

CLAPTON

jcuurthht wrote: »

Thanks. That makes sense.

Perhaps it would be worth hiring an accountant.

it may or may not be worth getting an accountant as that depends upon your overall circumstances.
You need to claim all your allowable expenses to get the maximum tax relief. Presumably you have researched what you can claim as expenses : if not then an accountant may be advisable.

do remember the rules change for tax year 2016-17 onwards