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Ahead of taking some proper advice from my accountant, he's really busy this time of year!
I've recently re-financed my previous 'consent-to-let' property onto a BTL mortgage, and am doing a rough version of my tax return, more to learn how to do it, prior to my accountant looking at it properly.
In re-mortgaging the property onto a BTL mortgage the following fees were incurred, could someone advise wether any are tax deductible, obviously I know the interest is in full (well for this tax period)
- Broker Fee
- Valuation Fee
- CHAPS Fee
- Completion Fee (Added To Mortgage)
- Solicitors Fees
Thanks In Advance,
- Broker Fee - Tax deductable against rental income under professonal fees
- Valuation Fee - as above
- CHAPS Fee - as above
- Completion Fee (Added To Mortgage) - you can just deduct the interest that you pay against rental income.
- Solicitors Fees - Capital expenditure keep to deduct against capital gains when you sell.
Thanks Paul much appreciated
From your description this was a remortgage (not a purchase), in which case all the solicitor costs were related to refinancing and therefore are also tax deductible against rental income.
The completion fee, although added to the mortgage, was still a fee and not part of the loan advanced and therefore is also deductable from rental income. There are two schools of thought on how, though, Some accountants say it should follow accounting principles and be spread across the life of the mortgage, eg. if it's a 20 year mortgage you would deduct 1/20th each year. Others say it can all be deducted in the first year it was incurred. I will try and locate the argument setting out why this is possible.
Thanks Andrew, your help is really appreciated
Andrew, further to this, there was a small early repayment charge for redeeming the mortgage, can this be claimed also?
But note that from 6 April this year the tax deductibility of all of the above will be affected by the new BTL tax rules, and from 2021 it will not be deductible at all (instead you may be able to get a tax credit equal to 20% of the fees).
This is a result of Section 24 of the Finance Act 2015 (which is more widely known for restricting the deductibility of mortgage interest).
Thanks for the advice above on what is tax deductible - Can anyone advise how to declare the cash-back bonus I received when remortgaging a BTL mortgage with Virgin? Is this added to earnings?