tax on mortgage fees on rented properties

JLMitchell

Hi, I am trying to find out if the mortgage arrangement fee on rented property is regarded as a deductible expense or is subject to the new tax restrictions that apply to the mortgage interest payments. The HMRC Property Income Manual seems to give conflicting advise, PIM 2105 states that loan fees are incidental costs that can be deducted, i.e. 100% of fee is tax deductible. PIM2054 says that the new restrictions include loan fees, i.e. only 50% of fee is deductible, reducing to 25% next year and then zero. Cannot seem to be able to talk to an expert at HMRC so please can someone let me know which scenario is correct?
Its an interest only mortgage and the fees can either be paid up front or added to the loan

Crashy_Time

Best talk direct to HMRC IMO.

anselld

It is part of the cost of finance and treated in the same way as interest.

It is incorrect to say 50%, 25% etc is deductible. It is all deductible, however the quoted percentages are restricted to 20% relief for a 40% tax payer.