Interest on a loan used to buy a property for letting is an allowable expense against the rental income as is interest on a loan taken out for repairs.
The costs of obtaining loan finance are also allowable. Dependent on the type of loan obtained, the following are tax deductible:
Legal and professional expenses for the negotiation of a loan and preparing documents.
Underwriting commissions, brokerage and introduction fees.
Land registry fees, search fees and valuers’ fees in connection with the security of the loan.
Commitment fees for an undertaking to make the loan available.
Example:
Some lenders add the costs of setting up the loan to the loan itself. Provided these costs are allowable, the interest associated on the relevant part of the loan is also allowable.
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