Tax buy to let

nxy · Post by **nxy** » Sun Sep 23, 2007 9:14 pm

after some advice, lets say i bought a property for 30k (loan), used 20k on upgrade (savings) was just going to sell but have now decided to rent. I was thinking of now getting a 50k (loan/buy to let) to put back the savings. Does this mean i can now offset the profits from the rent against the 50k intrest on the loan, or can i only have tax relief on the purchase price of 30k.

help

Post by ed » Sun Sep 23, 2007 9:55 pm

With regards rental income you can ofset lots of costs ie agency fees, mortgage interest, maintence costs etc etc.

Heres a usefull link:
http://www.braemore.co.uk/info/letting.aspx

May also be a good idea to chat to a friendly accountant such as Dom.
HTH cheers Ed

nxy · Post by **nxy** » Sun Sep 23, 2007 10:11 pm

cheers ed, ive looked at the other offsets, my main concern is can i offset 50k via new loan, when the property cost 30k or will tax man say you only paid 30k and thats all i can offset ( on the mortage front) and not allow the 20k savings to be offset.
i think it may be a trip to an accountant

Dominic · Post by **Dominic** » Mon Sep 24, 2007 12:08 pm

Watch out for capital gains tax when it comes to selling time.

ryallm · Post by **ryallm** » Mon Sep 24, 2007 12:36 pm

I have got 2 buy to let flats, and my understanding is that you can offset the the rental income against interest on the loan on the property, regardless of what you paid for it or how big the loan was when you started, but I would check this with an accountant. For this reason if you have a mortgage on your own home too it makes sense for tax purposes to keep the loan on your own house as small as possible, but the loan on the BTL property as big as possible to maximise the tax offset, with the caveat that most BTL lenders require at least a 15% deposit, plus evidence that the rental income more or less covers the interest on the loan.

Mark

renmure · Post by **renmure** » Mon Sep 24, 2007 2:32 pm

I have some property rented out and I vaguely remember my accountant telling me in the past that it was not possible to remortgage the rented property onto a buy-to-let type loan in order to make a tax advantage. For CGT the original lower price will be the base for capital gain when you dispose of the property. Also, all the things you can off-set against income does make very good reading, but the money you are spending (eg loan interest, fees, wear & tear depreciation etc) is real money which actually comes out of your pocket so is not quite as good as at first glance. I know that is stating the obvious but its helpfull to keep in mind