Working out mortgage interest

[ivrytwr3]

As a newbie LL i have picked up from here that when filling in a self assessment tax form i can claim back tax paid on the interest of my mortgage. How do i work out out the figure i am claiming?

Maths is not my strong point!

[susan 2]

Normally your mortgage company should send you once a year a statement showing the amount of interest paid. You should keep these for six years as the tax office may need to see them. If you have not had one then just ring and ask.

[ivrytwr3]

ah ok, thank you! This is my first property and also my first mortgage, so was not aware of this yearly statement.

Thanks again. :D

[Tax Accountant]

As a newbie LL i have picked up from here that when filling in a self assessment tax form i can claim back tax paid on the interest of my mortgage. How do i work out out the figure i am claiming?

Maths is not my strong point!

I am not sure if I understand your query correctly.

First of all, you have not been charged any tax on the interest on your mortgage and therefore there in nothing to claim back as such.

The position is that, if you have rental income and no expenses to set off against it, you would be charged tax on the whole of your rental income.

However,you would normally incur expenses relating to your let property. To the extent that the expenses are eligible, you would reduce your rental income by the amount of these eligible expenses and pay tax only on the remaining profit. One such eligible expense is the interest you have been charged by your lender on the amount borrowed to buy the let property. If your total eligible expenses are more than your gross rental income for any particular year, you would be eligible to carry the excess expenses forward to later years and use it to reduce the next available rental profit.

Therefore, interest on a mortgage does not generate any tax refund but instead is used to reduce any tax you would otherwise be charged on your rental income.

I hope this clears any possible misunderstanding on your part.

Ramnik

[Property Renovations]

Interesting information.

[Tax Accountant]

Interesting information.

Is this simply a plug for the above website or what?


Ramnik