Mortgage Interest Tax Relief

[doublet]

Hi,
If I own a property on a residential mortgage, and the lender will agree to it being rented out, can I still put the interest down as an expense to off-set my rental income? I'm just thinking that if I had a really good residential mortgage deal with no problem letting, then it may be cheaper than actually remortgaging to a buy-to-let product. Let's say the property is privately owned, not by a limited company.

Any advice would be greatly appreciated!

[Tax Accountant]

Hi,
If I own a property on a residential mortgage, and the lender will agree to it being rented out, can I still put the interest down as an expense to off-set my rental income? I'm just thinking that if I had a really good residential mortgage deal with no problem letting, then it may be cheaper than actually remortgaging to a buy-to-let product. Let's say the property is privately owned, not by a limited company.

Any advice would be greatly appreciated!


The simple answer is YES. There is no need to change to Buy to let product as far as the taxman is concerned. You will be surprised how many people actually let their formal residences on residential mortgages.

Ramnik

[Viz]

Karongo,
Hi Sorry if i'm repeating whats already been said, but you seem very up to speed on tax issues. If for example i had a property for which the mortgage was say £600 interest only, and i decided to charge £200 in rent, could i claim the £400 loss in tax relief and how is the tax releif claimed?

[Tax Accountant]

Karongo,
Hi Sorry if i'm repeating whats already been said, but you seem very up to speed on tax issues. If for example i had a property for which the mortgage was say £600 interest only, and i decided to charge £200 in rent, could i claim the £400 loss in tax relief and how is the tax releif claimed?

Who would you rent to? Surely you would not rent your property for only £200 when its real value is say £800?

Rental is taxed under self assessment as a business. If you genuinely made a loss on rental business, which a lot pof people actually do after taking account of all allowable expenses and interest, you can only set the loss against the rental profits from other properties you may have. If you do not have any other rental profits, you can only carry forward the losses to reduce your rental profits of future years.

In short, you cannot claim any tax refund if that is what you meant.

Ramnik