Allowable expenses for landlords?

Bungarm2001

As far as I know, you can't claim back interest on a mortgage unless it is actually a buy to let mortgage taken out specifically to buy a property with a view to letting it out. (Others please correct me if I'm wrong.)

If you rent it out, you must declare the gross rent to the taxman as you know. You can claim for a few expenses, mainly repairs (but not replacements/improvements such as say double glazing) also you can claim mileage if you have to go to the property to do your own repairs. Wear and tear is also claimable, but really you'd be better off getting a good accountant who is experienced in these kind of accounts. Most are very reasonable and as far as I am concerned, worth every penny 'cos their fees are deductable too!

Personally, I don't know why you want to get yourselves into this minefield with the market the way it is. Why not save the deposit and go for something later on when you can afford it and the prices will have dropped?

real1314

You're wrong, in fact if you borrow against your own home to fund a BTL you can claim the interest against the rent.

e.g own home worth £200k, no mortgage. Raise £60k mortgage, use £30k savings to buy a BTL at £90k. The interest portion of the £60k mortgage is allowable.

Bungarm2001

Thanks real1314!

Can you point me to anything online that supports that? Is there anything on the HMRC website about this? I couldn't find anything at all when I looked...thanks in advance.

mjgiorgianni

terryw wrote: »

Take care here as you could be in bother with the mortgage company if it is not a buy-to- let. They just might not agree, fee or no-fee.

Those costs associated are not reclaimable against Income Tax, but keep them as you may be able to use them for Capital Gains if you are liable when you sell.

Assuming it is in joint names you should each declare one half of the rent in your tax returns.

terryw

I agree with you! Good advice.

terryw

Bungarm2001 wrote: »

As far as I know, you can't claim back interest on a mortgage unless it is actually a buy to let mortgage taken out specifically to buy a property with a view to letting it out. (Others please correct me if I'm wrong.)

If you rent it out, you must declare the gross rent to the taxman as you know. You can claim for a few expenses, mainly repairs (but not replacements/improvements such as say double glazing) also you can claim mileage if you have to go to the property to do your own repairs. Wear and tear is also claimable, but really you'd be better off getting a good accountant who is experienced in these kind of accounts. Most are very reasonable and as far as I am concerned, worth every penny 'cos their fees are deductable too!

Personally, I don't know why you want to get yourselves into this minefield with the market the way it is. Why not save the deposit and go for something later on when you can afford it and the prices will have dropped?

Sorry, don't agree with first para.....see real1314's post.

Second para...can't agree with either simple rent compution is not worth paying fees for. See other posts above which give full details of expenses to be claimed.

Third para...agree one hundred per cent, but this is a personal view and the OP who is paying the cash out must make his own mind up about this.

terryw
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Bungarm2001

Yep I agree with it all..up to a point. We employed an accountant in the beginning because we have quite a few properties, but they can be very helpful for managing even one property. I was amazed at what you can claim against...I wouldn't have known half of it if I didn't get an accountant in the early days. Even employing one for the first year can really open your eyes, particularly if you are totally new to this game.

Still not sure about the BTL/resi mortgage interest rate claiming. I can't find anything that states clearly that a resi mortgage if used for a BTL is interest-deductable.

Anyone?

terryw

Bungarm2001 wrote: »

Yep I agree with it all..up to a point. We employed an accountant in the beginning because we have quite a few properties, but they can be very helpful for managing even one property. I was amazed at what you can claim against...I wouldn't have known half of it if I didn't get an accountant in the early days. Even employing one for the first year can really open your eyes, particularly if you are totally new to this game.

Anyone?

Please advise any expenditure against gross income that has not been mentioned above for the sake of other MSE's. Thanks

terryw

Vincenzo

Bungarm2001 wrote: »

Yep I agree with it all..up to a point. We employed an accountant in the beginning because we have quite a few properties, but they can be very helpful for managing even one property. I was amazed at what you can claim against...I wouldn't have known half of it if I didn't get an accountant in the early days. Even employing one for the first year can really open your eyes, particularly if you are totally new to this game.

Still not sure about the BTL/resi mortgage interest rate claiming. I can't find anything that states clearly that a resi mortgage if used for a BTL is interest-deductable.

Anyone?

I looked into this a while ago. I am afraid I never found a HMRC document to spell it out but neither did I find anything to the contrary. It was my conclusion that the purpose of the loan is what matters. The accountant that did the returns agreed and this has been the case ever since. After all it is much cheaper to borrow on your main residence

Vincenzo

Conversely, if you would rather the loans are secured on the investment properties it can be worth remortgaging them up to a maximum of the original purchase price and using that cash to pay off some of the mortgage on your main residence. You will need to look at whether the increased interest is worth paying compared to the tax savings and (as with most tax issues) much will depend on your own circumstances.

silvercar

You can claim the mortgage interest as an allowable expense for mortgage amounts upto the value of the property when you first let it. Often there will be a mortgage on the rental property of say 80% of its initial value and the remaining 20% could be attributed to a portion of the mortgage on your residential home.

I don't see the value in swapping mortgages from one property to another. Interest rates would normally be higher on a BTL than residential. As far as security goes, if you were repossessed on a BTL the sale price didn't clear the mortgage you can be sure the lender will come looking for other assets you may have eg your home and seek a charging order!