Guarenteed 5% treated the same as rent?

M

Michael

Guest
Hello, I am investing in a property in the UK. I have been offered a guaranteed 5% of the purchase price payable to me for the first two years . I will rent it out after that. Am I entitled to offset this 5% income against the Interest on the loan for calculating final tax liability(as I would be able to do with Rent)? Thanks
 
Hi Michael - I'm not expert on the tax impacts, so I'll wait for other posters to respond on this.

However, I'm very dubious about these kind of offers. Why would any developer offer this kind of giveaway, unless they have simply built the cost of the offer into the original price? I'm guessing that they are really just giving you back your own money.

Are you confident that you are getting real value for money in this case?
 
Thanks Rainyday, You are right to be dubious but in this case I know who I am dealing with it and the price is also competitive. I am quite happy to avoid having to find a tenant for the first 2 years but want to be sure the money can be offest just like rent. Any takers? Thanks
 
Yes the 5% must be treated the same as rent.

I too would be cautious of this. Extremely so. They are offering 5% as they know you won't get that much after the two years are up.
 
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