Letting out a property expenses

PCharlie

I am thinking of doing a BTL and have think I understand what you can or can't being the biggest of what you can claim as expenses on mortgage interest. If I however don't have a mortgage on that property but another can I put It down as cash as an expense! for the purchase price. This just sounds ridiculous even typing it but isn't the purchase the biggest expense! as surely no one would ever make a profit.

[Deleted User]

It is a bit ridiculous. You have purchased a property for, say, £150000. You let it out, receive an income less expenses and at the end of the year the property is still worth £150000. Where is the expense incurred?

Pennywise

You can't claim the cost of the property nor doing it up for rent, against the rental income. You claim those costs against the eventual selling price - i.e. capital gains tax on sale price less purchase price.

PCharlie

Thank you for clarifying. Think I was reading too much and getting way too confused!!

slopemaster

IANAE but I think the answer to your Q is, yes you can (claim tax relief on interest payments)- if you can argue that the mortgage on property A (eg, the house you live in) raised the money for property B, the property you let.

silvercar

PCharlie wrote: »

I am thinking of doing a BTL and have think I understand what you can or can't being the biggest of what you can claim as expenses on mortgage interest. If I however don't have a mortgage on that property but another can I put It down as cash as an expense! for the purchase price. This just sounds ridiculous even typing it but isn't the purchase the biggest expense! as surely no one would ever make a profit.

It is the purpose of the money that counts. So if you borrow against your residnetial home to buy the BTL, the interest on that money would be an expense (but not capital repayment and note the rules introduced in limiting what is allowable for higher rate tax payers).

Easy evidence will be in the timing - if you borrowed money aligning with the purchase time. I reckon you would have a harder job justifying an existing mortgage; even arguing that you could have paid off that mortgage but chose to keep it to fund the BTL is harder to prove.