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Where Taxpayers and Advisers Meet

Tax relief on remortgaged BTL

guardog
Posts:11
Joined:Thu Jul 03, 2014 4:58 pm
Tax relief on remortgaged BTL

Postby guardog » Wed May 04, 2022 12:53 pm

Hi Everyone

Could someone please clarify for me the following which I read about and find a little confusing.

If you re-mortgage your outstanding mortgage with another lender, then you can still offset the interest repayments. Is that statement correct because as we all know to our cost that interest is a disallowable expense so how can remortgaging the same property for the same amout but with a new lender be an allowable expense.

Thanks in advance

Jholm
Posts:360
Joined:Mon Mar 11, 2019 4:22 pm

Re: Tax relief on remortgaged BTL

Postby Jholm » Wed May 04, 2022 2:04 pm

Because you still get basic rate tax relief (in most instances) on the mortgage interest, rather than a deduction from profits.

Generally, most basic rate taxpayers are no better or worse off because of this.

guardog
Posts:11
Joined:Thu Jul 03, 2014 4:58 pm

Re: Tax relief on remortgaged BTL

Postby guardog » Wed May 04, 2022 2:28 pm

Thank you for that and I understand that 20% tax it would make little if any difference however at 40% there is a difference. So my question is am I able to submit to the revenue having remortgaged and being at 40% tax rate the interest charged as a deduction from rents as it used to be in the good old days

Jholm
Posts:360
Joined:Mon Mar 11, 2019 4:22 pm

Re: Tax relief on remortgaged BTL

Postby Jholm » Wed May 04, 2022 3:46 pm

You would report the mortgage but it won't show as a deduction in your profits. Subject to certain potential restrictions, you will get the 20% relief on the amount rather than the 40%.

bd6759
Posts:4262
Joined:Sat Feb 01, 2014 3:26 pm

Re: Tax relief on remortgaged BTL

Postby bd6759 » Wed May 04, 2022 10:51 pm

Whether the loan interest would be allowable we’ll depend on the purpose of the loan.


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