10:44 AM, 13th August 2014, About 11 years ago 24
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I was inspired to ask this question based on the article that Mark Alexander wrote this morning about one very arrogant member thinks he who knows it all. The article was entitled “Naive Question From Landlords” [link]
Perhaps he can enlighten me?
The most recent arrangement fee quoted to me for an interest only BTL mortgage was at the top end of the range – £4,000 for a £160,000 mortgage.
I know that interest is off-settable against rental profits but what about arrangement fees?
Many thanks
Ian
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Puzzler
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Member Since July 2013 - Comments: 1262 - Articles: 1
12:56 PM, 16th August 2014, About 11 years ago
The business starts when first is let but that doesn’t mean you cannot deduct for expenses previously incurred – same goes with VAT in a business as long as the expenses were directly due to setting up the business
Ryan Whelpdale
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Member Since August 2015 - Comments: 8
16:49 PM, 28th August 2015, About 10 years ago
Reply to the comment left by “Romain Garcin” at “13/08/2014 – 14:20“:
As we understand it, fees incurred in obtaining a loan are allowable expenses but not legal fees involved in the purchase of a property. We recently re-mortgaged a BTL house whose mortgage had already been paid off. This incurred legal fees of £495, fees that were purely for arranging a new loan with the lender, rather than for legal work involved in purchasing a property (as we had already purchased the house years earlier). Would these be tax-deductible or not, please?
Thanks.
Marie
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Member Since April 2016 - Comments: 48
10:25 AM, 30th June 2018, About 8 years ago
Reply to the comment left by Neil Barlow FCCA ATT at 14/08/2014 – 11:26
Hi Neil
I am told by my accountant that this has all changed now and arrangement fees can no longer be offset. Is this correct?
Nick Pope
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Member Since August 2013 - Comments: 179
11:24 AM, 30th June 2018, About 8 years ago
I have just te-mortgaged 2 properties on a five year fixed and the fee for each was £995.
However, I have rolled this into the loan and consequently will be paying interest on the fees element of the capital sum for the full 5 years. My accountant takes the view that if the interest is tax deductible (even at the basic rate of 20%) then it could not be charged as an expense as one would effectively get the tax offset twice.
CristinaB
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Member Since March 2020 - Comments: 5
11:33 AM, 6th April 2020, About 6 years ago
Reply to the comment left by Marie at 30/06/2018 – 10:25
Hello Marie, did you find a definitive answer to your question? I am remortgaging a BTL property. The fee (£1,995) can be paid at start or built into the mortgage. I would pay the fee now if I know for sure it can be deducted. Thank you
Mark Alexander - Founder of Property118
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Member Since January 2011 - Comments: 12111 - Articles: 1330
14:08 PM, 6th April 2020, About 6 years ago
Reply to the comment left by Nick Pope at 30/06/2018 – 11:24
The arrangement fee is definitely a finance cost, as is interest on the money you borrowed to pay it.
CristinaB
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Member Since March 2020 - Comments: 5
14:47 PM, 6th April 2020, About 6 years ago
Reply to the comment left by Mark Alexander at 06/04/2020 – 14:08
thank you Mark – Can we deduct the remortgage fee from our rental income? does it make a difference if it is paid as a lump-sum when the mortgage is set-up, or built in the mortgage financing?
Mark Alexander - Founder of Property118
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Member Since January 2011 - Comments: 12111 - Articles: 1330
14:50 PM, 6th April 2020, About 6 years ago
Reply to the comment left by CristinaB at 06/04/2020 – 14:47
You have already paid the arrangement fee with borrowed money.
The Section 24 restrictions on finance cost relief will apply if you are not a Limited Company.
For further guidance please see http://www.property118.com/tax and book a tax planning consultation.
CristinaB
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Member Since March 2020 - Comments: 5
14:55 PM, 6th April 2020, About 6 years ago
Reply to the comment left by Mark Alexander at 06/04/2020 – 14:50
Sorry, I am not sure if I understand, can I deduct the remortgage fee from my rental income? I am not a company, I act as an individual
Mark Alexander - Founder of Property118
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Member Since January 2011 - Comments: 12111 - Articles: 1330
15:00 PM, 6th April 2020, About 6 years ago
Reply to the comment left by CristinaB at 06/04/2020 – 14:55
As off today you cannot offset ANY finance costs against rental income, they are disallowed. instead you get a tax credit of 20% of the finance costs.
Last year 75% of finance costs were disallowed.