Claiming rent Relief while Property Empty

J

jumper1

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Hi , bought property (a) in 2000 lived in for 6 years as PR. In 2007 bought another property (b) and property (b) became PR since Mar 2007.

Remortgaged property (a) as Buy to Let in May 2007 . Eventually Rented Property (a) from July to Dec 2007. Tenant left in December 2007 but unable to find another Tenant until 01-August-2008 for 6 months rental.

My Question is , can i claim Mortgage Interest for property (a) while property was not rented from May to Jun 07 and Jan 08 to Jul 08. The property was unoccupied and i was not living in property (a) during this time .

Regards Jumper
 
I presume you mean can you offset the interest against rental income? And not can you claim owner occupier mortgage interest relief?
 
You can claim the mortgage interest as an expense against your rental income from when the property was first let (July 07) and for the vacant period (Jan-Jul 08). You need to be registered with the PRTB to claim this. It is possible you will make a loss in the relevant years, but you still need to complete a tax return in order to carry the loss forward.
 
Hi

you say that you remortgaged property A as buy to let. Did you increase the amount of the mortgage on this property. If so then you need to be careful how much interest that you offset against rental. As far as i know (stand to be corrected), you can only offset the amount of interest due on original loan. Maybe somebody else can clarify this

Steelblue
 
You're right Steel blue,

Only the interest on the original loan can be offset.
 
You cannot claim any interest relief if you remortgaged property a, maybe you mean that the lender had a clause in the mortgage that if it changed from your PPR to investment that the terms (interest rate highter) would be different. If this is the case, yes you can offset the interest rate from the time the first tenant moved in. You ought to be able to give a good reason why you had no rental income for 8 months, in case you're asked by revenue. There may be a perfectly valid reason but from a revenue point of view it would appear to be a very long time without income.
 
Bronte said:
You ought to be able to give a good reason why you had no rental income for 8 months, in case you're asked by revenue. There may be a perfectly valid reason but from a revenue point of view it would appear to be a very long time without income.
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Is that a case of guilty until proven innocent?

Rental statement will state income received, less interest allowable, less expenses = profit. I would see no need for explanatory notes.
 
They don't have to say anything to revenue now, but they may be asked why in the future. It's nearly 2/3 of a year, I imagine voids of 2 to 3 months are normal but 8 months would be extraordinarily long and revenue may or may not query it. As I said it could be easily explainable if one were doing renovation work, property in an area difficult to rent etc.
 
AFAIK, the interest on the re-mortgage CAN be used to offset rental income where the additional re-mortgaged money was used to improve the property in question.
 
Correct. Interest on any loans used to buy or renovate the property can be offset. But not money raised for other purposes.
 
Bronte said:
You ought to be able to give a good reason why you had no rental income for 8 months, in case you're asked by revenue. There may be a perfectly valid reason but from a revenue point of view it would appear to be a very long time without income.
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it dosent matter about revenues point of view....its up to you if you choose to rent your property or leave it vacent. why should you have to explane anything!!
 
starlite68 said:
it dosent matter about revenues point of view....its up to you if you choose to rent your property or leave it vacent. why should you have to explane anything!!
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Do you mean buying a property just for capital appreciation? You cannot offset the interest on a property until you have first rented it, if you never rent it you cannot offset the mortgage interest. My attitude to revenue is - caution - and be prepared to explain everything.
 
i mean buying a property to rent it........if you choose to leave it vacent for a few months thats your loss and your business.....whats there to explain to anyone?
 
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