Rental Property and Mortgage interest relief

00ec25

silvercar wrote: »

Not sure if I should be carrying it forward, but until when??

yes you should, ad infinitum if necessary

sb94707

00ec25 wrote: »

as per the link I gave you
How the tax reduction is worked out
The reduction is the basic rate value (currently 20%) of the lower of:

a) finance costs - costs not deducted from rental income in the tax year (this will be a proportion of finance costs for the transitional years) plus any finance costs brought forward

b) property business profits - the profits of the property business in the tax year (after using any brought forward losses)

c) adjusted total income - the income (after losses and reliefs, and excluding savings and dividends income) that exceeds your personal allowance

The tax reduction can’t be used to create a tax refund.

she has rent of 14,000
finance costs of 3000

50% allowed in computing the profit, so profit 14-1.5 = 12.5

the remaining 50% is subject to the restriction. so lower of
a) finance costs 3,000 x 50%
b) property profit 12,500 x 50%
c) adjusted income: profits - less PA 12.5 = 12.5 x 50% = 0

finance costs to be carried forward 3,000 - 1,500 = 1,500

... so this £1500 that i AM allowed ..does it go in the "loan interest and other financial costs" box ?? or the the other one. cheers

silvercar

sb94707 wrote: »

... so this £1500 that i AM allowed ..does it go in the "loan interest and other financial costs" box ?? or the the other one. cheers

Both. But it doesn't do any good in the second box, so just sits there and it is that that you can carry forward.

sb94707

Thanks silvercar. / All Happy new year