Offsetting Interest - Multiple Properties

[Landlord9467]

Hi all,

Can anyone advise whether or not a net rental loss for one property can be offset against a net rental gain from another, given they have separate mortgages.

Ie. If property A does not cover its interest payments whilst property B does; then can the net loss of property A be deducted from the net gain of property B?

Any advise would be helpful or another way / format to achieve this result.

Many thanks!

[TaxationPete]

Your ental business is treat as a whole. Your total gross rental income minus your total interest payments, minus all your costs gives you your net reportable taxable income. Regards Peter

[Telometer]

...assuming that the loss-making property is not let at a reduced rent to say a relative.

[Landlord9467]

Your ental business is treat as a whole. Your total gross rental income minus your total interest payments, minus all your costs gives you your net reportable taxable income. Regards Peter

Hi Pete,

Thanks for the reply. Just a couple more questions.

1. Does it matter that one is commercial and the other residential?

2. Does it matter that both properties are owned privately (by the same person) but not by a company?

Look forward to hearing and thanks again!

Kind Regards,

[Phlash]

Lump it all together.

Ownership by individual / company dictates how it will be taxed, i.e. under corporation tax or income tax. A lot of the calculations used to arrive at taxable profits are the same however.

The fact that one loan is on commercial terms and one is a BTL mortgage matters not, the fact is they are interest costs that the rental business incurs and are both deductible.

In short, your net loss on one will offset your net profits on the other, do not be worried.

[Landlord9467]

Thanks for the clarification guys!
:)

[JoyceLB]

Hi, have you considered claiming a tax rebate (Capital Allowances) from HMRC for your commercial property? Providing there hasn't been any previous claim then you could be entitled to literally thousands of pounds.

[Phlash]

Hi, have you considered claiming a tax rebate (Capital Allowances) from HMRC for your commercial property? Providing there hasn't been any previous claim then you could be entitled to literally thousands of pounds.

Hold your horses there Joyce. We're not sure whether he means commercial finance, or a commercial property, but you're right it is something to look into with your accountant / chartered surveyor if it is a commercial property.

This is a tetchy area, particularly HMOs - and one that HMRC are clarifying in due course. There is a thread that I started on it, and it will be updated as and when HMRC make up their mind.