Mortgage interest tax credit for residential mortgage with consent to let

MGCP88

Hello,

My wife and I have a residential repayment mortgage (not buy-to-let) for the flat we had lived in for the last few years. We have now got consent to let whilst we are away travelling for eighteen months.

I'm completing my self-assessment tax return. Does anyone know if we are eligible for mortgage interest tax relief (20% tax credit)? 

Most websites seem to talk about it with respect to buy-to-let mortgages, but I can't see anywhere explicitly saying one way or another whether we are eligible.

Thank you.

Hoenir

Not clear whether you have travelled or will be travelling. 

theartfullodger

Did rental of the place start before 7th April 2023…?

if not, no - for any SA return you are completing now....

What makes you confident you will get the place back after 18 months?

If England this may help inform some of the paperwork you need to get right to be able to evict.

Which country?  e.g. Wales, NI....

Done any training in how to be a landlord?  Having an agent still means you are liable for any issues.

Are you confident that you have the financial AND emotional reserves to cope with the tenant-from-hell (or agent from..) and not getting rent for say 7 months?

Good luck......

anselld

You can, but only for the duration you are letting and only the interest element of the repayment.

silvercar

MGCP88 said:

Hello,

My wife and I have a residential repayment mortgage (not buy-to-let) for the flat we had lived in for the last few years. We have now got consent to let whilst we are away travelling for eighteen months.

I'm completing my self-assessment tax return. Does anyone know if we are eligible for mortgage interest tax relief (20% tax credit)? 

Most websites seem to talk about it with respect to buy-to-let mortgages, but I can't see anywhere explicitly saying one way or another whether we are eligible.

Thank you.

Yes. There is no obligation to have the borrowing as a designated BTL mortgage, in fact there is no obligation to have the borrowing as a mortgage at all, it could be a personal loan or any other sort of borrowing. It is the purpose the loan that counts, not where, if or how it is secured.

MGCP88

silvercar said:

MGCP88 said:

Hello,

My wife and I have a residential repayment mortgage (not buy-to-let) for the flat we had lived in for the last few years. We have now got consent to let whilst we are away travelling for eighteen months.

I'm completing my self-assessment tax return. Does anyone know if we are eligible for mortgage interest tax relief (20% tax credit)? 

Most websites seem to talk about it with respect to buy-to-let mortgages, but I can't see anywhere explicitly saying one way or another whether we are eligible.

Thank you.

Yes. There is no obligation to have the borrowing as a designated BTL mortgage, in fact there is no obligation to have the borrowing as a mortgage at all, it could be a personal loan or any other sort of borrowing. It is the purpose the loan that counts, not where, if or how it is secured.

Thank you, this is very helpful.

I suppose I was wondering if the initial purpose of the loan (which was for me to live there on a residential mortgage when I bought the flat a few years ago) counted, but now that I've moved out and I'm renting I would argue that the current purpose of the loan is to enable me to rent. Without the renting we would have to sell up. Is this the right way of looking at it, that it is the current purpose of the loan that counts?

MGCP88

anselld said:

You can, but only for the duration you are letting and only the interest element of the repayment.

anselld said:

You can, but only for the duration you are letting and only the interest element of the repayment.

Thank you, this is very helpful

MGCP88

theartfullodger said:

Did rental of the place start before 7th April 2023…?

if not, no - for any SA return you are completing now....

What makes you confident you will get the place back after 18 months?

If England this may help inform some of the paperwork you need to get right to be able to evict.

Which country?  e.g. Wales, NI....

Done any training in how to be a landlord?  Having an agent still means you are liable for any issues.

Are you confident that you have the financial AND emotional reserves to cope with the tenant-from-hell (or agent from..) and not getting rent for say 7 months?

Good luck......

Thank you. The rental did indeed start in the last tax year. So far it has gone without problems but thank you for your helpful words of advice!

anselld

MGCP88 said:

theartfullodger said:

Did rental of the place start before 7th April 2023…?

if not, no - for any SA return you are completing now....

What makes you confident you will get the place back after 18 months?

If England this may help inform some of the paperwork you need to get right to be able to evict.

Which country?  e.g. Wales, NI....

Done any training in how to be a landlord?  Having an agent still means you are liable for any issues.

Are you confident that you have the financial AND emotional reserves to cope with the tenant-from-hell (or agent from..) and not getting rent for say 7 months?

Good luck......

Thank you. The rental did indeed start in the last tax year. So far it has gone without problems but thank you for your helpful words of advice!

Not aware of any relevance of 7th April 2023 anyway in respect of property finance cost.  Perhaps Artful could enlighten us?

silvercar

MGCP88 said:

silvercar said:

MGCP88 said:

Hello,

My wife and I have a residential repayment mortgage (not buy-to-let) for the flat we had lived in for the last few years. We have now got consent to let whilst we are away travelling for eighteen months.

I'm completing my self-assessment tax return. Does anyone know if we are eligible for mortgage interest tax relief (20% tax credit)? 

Most websites seem to talk about it with respect to buy-to-let mortgages, but I can't see anywhere explicitly saying one way or another whether we are eligible.

Thank you.

Yes. There is no obligation to have the borrowing as a designated BTL mortgage, in fact there is no obligation to have the borrowing as a mortgage at all, it could be a personal loan or any other sort of borrowing. It is the purpose the loan that counts, not where, if or how it is secured.

Thank you, this is very helpful.

I suppose I was wondering if the initial purpose of the loan (which was for me to live there on a residential mortgage when I bought the flat a few years ago) counted, but now that I've moved out and I'm renting I would argue that the current purpose of the loan is to enable me to rent. Without the renting we would have to sell up. Is this the right way of looking at it, that it is the current purpose of the loan that counts?

Yes, current purpose is to keep the mortgage going as a cost of renting the property.

silvercar

anselld said:

MGCP88 said:

theartfullodger said:

Did rental of the place start before 7th April 2023…?

if not, no - for any SA return you are completing now....

What makes you confident you will get the place back after 18 months?

If England this may help inform some of the paperwork you need to get right to be able to evict.

Which country?  e.g. Wales, NI....

Done any training in how to be a landlord?  Having an agent still means you are liable for any issues.

Are you confident that you have the financial AND emotional reserves to cope with the tenant-from-hell (or agent from..) and not getting rent for say 7 months?

Good luck......

Thank you. The rental did indeed start in the last tax year. So far it has gone without problems but thank you for your helpful words of advice!

Not aware of any relevance of 7th April 2023 anyway in respect of property finance cost.  Perhaps Artful could enlighten us?

If rent was before 7/4/23 it would fall in the tax year 2022-23 for which the return would be due by 31/1/2024 so worth considering now. If later than 7/4/23 you have time to complete the tax return as it’s a whole year later.