Product Fee on new BTL -Tax deductable?

GeddyMortgage

I have one BTL property that I began to let out in June 2017 and have been receiving rental income from then until now.

I am about to do another BTL property at the end of February, this one has a mortgage product fee of £1495. However, this property will not receive any rental income this side of the end of tax year.

My question is, am i able to legally put forward the second mortgage product fee to offset my tax bill from the rental income i've received from my initial buy to let property? Is this viewed as one property portfolio for tax? or is this not allowed as it is the mortgage fee for a different property and they should be treated independantly/seperately?

thanks,

Pennywise

Let properties are "pooled". You have a property business. Income/expenses are pooled, not accounted on a "property by property" basis. So, it doesn't matter that the new property hasn't been let out yet - the fees are a legitimate expense of your property business.

GeddyMortgage

Finally some good tax news. I had hoped as much. Thankyou.

POPPYOSCAR

Pennywise wrote: »

Let properties are "pooled". You have a property business. Income/expenses are pooled, not accounted on a "property by property" basis. So, it doesn't matter that the new property hasn't been let out yet - the fees are a legitimate expense of your property business.

How does it work if the fee is added to the loan?

Pennywise

POPPYOSCAR wrote: »

How does it work if the fee is added to the loan?

Depends on whether you've adopted cash or accrual accounting.

POPPYOSCAR

Accrual accounting.

Pennywise

POPPYOSCAR wrote: »

Accrual accounting.

Then the fee deductions are spread over the lifetime of the loan. So if it's a 20 year loan, the fees are claimed 1/20th per year.

GeddyMortgage

Interesting, I was going to opt for having the fee added to the loan. But I was under the impression that wouldnt make a difference and I could still claim the full amount for that tax year? If that's not the case surely it would be better to avoid the fees and just have a higher interest rate.