Do mortgage product fees fall under Section 24?

by Readers Question

10:57 AM, 24th February 2020
About 8 months ago

Do mortgage product fees fall under Section 24?

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Do mortgage product fees fall under Section 24?

I have had discussion with my new accountant in relation to Mortgage Product fees which had been incurred both during purchase and remortgage. My understanding is that, Mortgage Product fees forms part of phased Mortgage Interest Relief and should be input in same section on Tax return where you input your total Mortgage Interest costs under the section “Allowable Loan Interest and other financial costs” Accordingly my understanding is Mortgage products fees are equally impacted by section 24 as Mortgage Interest.

My accountant who seems to think that Mortgage product fees are not part of Section 24 and he argued that they should be placed under the section “Legal, management & other professional fees” Whilst I can understand that brokers fees and product fees should arguably fall under his understanding however I believe that they are part of section 24.

Any input will be greatly appreciated.

Simon


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Comments

Mark Alexander

11:06 AM, 24th February 2020
About 8 months ago

The section 24 restrictions apply to all "FINANCE COSTS".

Lenders arrangement fees are finance costs.

In other words, YOU are right and your accountant is wrong.

You may wish to share the HMRC rules with your accountant, which I have linked to below.

https://www.gov.uk/government/publications/restricting-finance-cost-relief-for-individual-landlords/restricting-finance-cost-relief-for-individual-landlords

Alternatively, you might consider engaging an accountant who actually understands property taxation!

The accountancy firm I recommend is Pacific Limited Chartered Accounts based in Norwich. Distance is not an issue with modern technology, bear in mind I live in Malta! I have been recommending them for over two decades and during that time I have introduced them to over 1,000 property investors. Accordingly, they specialise in property-based accounting and are experts in their field. They are a medium sized boutique accountancy firm and being based in provincial Norwich their pricing is very reasonable, especially when comparing them to the larger firms or London based practices. They certainly aren’t the cheapest, but they do provide excellent value for money, which is what is most important in my opinion. The best people to speak to in the first instance would be Neil Barlow or Graham Mitchell – Telephone 01603 630684.

Gary Bray

12:34 PM, 24th February 2020
About 8 months ago

Mark (and you) are correct here.
Think about it. If your accountant was right, lenders would just offer mortgage deals with insanely high fees and zero interest.

Simon Hall

21:40 PM, 24th February 2020
About 8 months ago

Reply to the comment left by Mark Alexander at 24/02/2020 - 11:06
Thanks Mark.

Simon Hall

21:41 PM, 24th February 2020
About 8 months ago

Reply to the comment left by Gary Bray at 24/02/2020 - 12:34
Thank you Gary.


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