12:07 PM, 28th April 2022, About 4 weeks ago 7
I am wondering if anyone has had any experience or knowledge of Equity Loans and how they may be treated as an expense or offset against CGT.
Briefly, I took an equity release loan on a property that used to be my residential home which I subsequently let as a BTL. This helped me build my BTL portfolio. I recently redeemed this product as prices were continuing to rise rapidly and I also wanted to transfer a share to my partner.
With this equity loan product, I paid no interest and the lender held an equity share benefiting from price increases. The product has proved quite expensive as prices have risen but it did help me early in my property journey.
Can anyone tell me how the redemption cost in excess of the original loan (over £30k) could be treated for tax purposes? In my view it’s not interest as it’s based on capital appreciation. My accountant is not a property expert and seemed to think it could be offset against future CGT, hence, the question. CGT would be my preferred position, however, if its interest it would have to be applied in the year it arises (and result in rental losses).
I have only been able to find one very old thread about it where Mark Alexander indicates that it’s unclear how it will be treated by HMRC.
If anyone can help or signpost me to further information and advice that would be great.
Great site, keep up the good work.
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