15:07 PM, 1st February 2022, About 4 months ago 37
I’d welcome readers’ thoughts on an issue I have discovered with S24 that was not immediately apparent (to me at least) and I am wondering if I (and my accountant) have right or wrong.
In summary: I thought S24 meant I would benefit from a 20% deduction for loan interest. However, this appears not to apply where you have a loss carry forward and your property profits are eating it up:
In greater detail: I had a loss carry forward from pre-2017. During 2017 to 2021 this loss was eaten up by my property profits, artificially inflated by s24. The issue I have is the qualifying loan interest figure put in Box 26 on page UKP 2 of each tax return 2017/18 to 2020/21 has only been the net loan interest figure after applying the 25% (2017/18), 50% (2018/19), 75% (2019/20) and 100% (2020/21) reductions. It would appear there is no way to apply the 20% relief to the interest I paid 2017-2021 but not appearing in Box 26, meaning the interest I paid each year was applied, and my profits artificially inflated, with no tax relief at all, let alone 20%
My accumulated unrelieved interest is now so high (and will only grow in years to come) it will be impossible for my property profits to catch up meaning it seems I am destined to have the 20% relief applied to my property profits and not to the interest I was unable to declare in Box 26 2017 to 2021.
I guess the way I need to look at this is:
1.1 I need to grow my property profits to equal my unrelievable loan interest each year, that way the 20% is applied to a figure which is the same whether loan interest or profits and so is of the same value to me; and
1.2 The 20% tax reduction applied to my property profits (so my property profits are taxed at 25%, not 45%) is the benefit I get for no tax relief being applied to the interest I’ve paid 2017-2021 but which did not appear in Box 26 while my loss carry forward was eaten up.
Welcome any comments. Have I got this right or wrong?
Btw, it’s brilliant to have this chat forum. Over the years I have read superbly helpful comments from so many contributors.
And finally, BTW, Osborne (yes you) if you are reading this, no I’m not going to give up and sell. Carney questioned my financial sense, my risk analysis and my desire to stand on my own two feet to look after myself and my family. How dare he?!! How DARE he?!!
I will sell when I want to, not because you or Carney, or the big real estate build to rent corporates who lobbied you, say I should.
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