Mortgage allowable expenses?

stuartb83

Can the costs associated with getting a buy-to-let mortgage for the first time in order to rent out a UK property, be claimed as tax relief?

Costs such as:
- Mortgage fees
- Solicitor fees
- Financial advisor fees

Do the same rules apply if the rental property is re-mortgaged a few years later?

Thanks.

Pennywise

No, you offset them against the sale proceeds when you come to sell it to reduce capital gains tax.

anselld

Pennywise wrote: »

No, you offset them against the sale proceeds when you come to sell it to reduce capital gains tax.

I don't think that is correct.
Ancillary fees associated with obtaining finance are allowable against income.
Fees associated with property purchase are against capital.

So in the OPs case they would need to clarify what exactly the solicitors fees were for but the mortgage and FA fees should be allowed.

https://www.gov.uk/hmrc-internal-manuals/property-income-manual/pim2066

Pennywise

anselld wrote: »

Ancillary fees associated with obtaining finance are allowable against income.

Yes, you're absolutely correct. Sorry, I mis-read the OP's question and got it in my mind it was asking about solicitors, valuation fees and stamp duty - more haste, less speed!

There remains the question as to what period over which to write off the mortgage and broker fees. Some say it should be spread over the period of the loan, i.e. 1/25th per year if it's a 25 year mortgage. I'm not too sure what HMRC current thinking is, especially with the doubt as to whether cash accounting for landlords has been introduced or not (removed from the current Finance Bill I believe).

anselld

Pennywise wrote: »

There remains the question as to what period over which to write off the mortgage and broker fees. Some say it should be spread over the period of the loan, i.e. 1/25th per year if it's a 25 year mortgage. I'm not too sure what HMRC current thinking is, especially with the doubt as to whether cash accounting for landlords has been introduced or not (removed from the current Finance Bill I believe).

Indeed that is a grey area. My own accountant's view is that HMRC were content with the simplicity of writing off in one (even before cash accounting) but that doesn't seem to be written anywhere definitive.

chrismac1

That's a no-brainer. Write it off right now in full. If HMRC can be arrssed to get off their seats and come and question it, fair play. Meeting an HMRC inspector is a very rare bird these days compared to 20 years ago.