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Can mortgage interest be treated as an expense

Just wanted to double check if the mortgage interest payment be fully treated as an expense?

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Hello

Just wanted to double check if the mortgage interest payment will be fully treated as an expense when preparing the Rental Net Profit?

I thought that I had read something last year that we wont be able to claim the full mortgage interest starting from 6th April 2017.

I have 2 residential properties and also I am employee as well, so I complete self employed self assessment tax.

 

many thanks 

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22nd Jan 2019 02:04

For 2017/18 3/4 of the interest is an expense and the other 1/4 is a tax reducer at 20%.
So if you are a basic rate taxpayer there will effectively be no difference to before.
If you are a higher rate taxpayer then tax relief will not be as effective as before.
If you are using special tax return software it will divide up the interest payable as to 3/4 and 1/4.

Thanks (2)
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By SXGuy
to penelope pitstop
22nd Jan 2019 10:49

Not all software does. My software makes me manually split the 3/4 and 1/4 in to separate boxes.

Thanks (1)
to SXGuy
24th Jan 2019 20:51

I use Taxcalc and it does it automatically, which is helpful if you forget. In fact, Taxcalc saves the day many times by stopping you when about to make a senseless entry.
It is a major factor which has stopped me buying cheaper tax software, although I do find Taxcalc a tad too expensive for me (although not as expensive as some "Rolls-Royce" software.

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By SXGuy
to penelope pitstop
24th Jan 2019 21:28

penelope pitstop wrote:

I use Taxcalc and it does it automatically, which is helpful if you forget. In fact, Taxcalc saves the day many times by stopping you when about to make a senseless entry.
It is a major factor which has stopped me buying cheaper tax software, although I do find Taxcalc a tad too expensive for me (although not as expensive as some "Rolls-Royce" software.

to be fair I just had a look at all the software they offer and I already use with another provider, and the price is actually slightly cheaper, so I may consider switching come renewal in April.
Thanks (0)
to penelope pitstop
22nd Jan 2019 13:15

Plus, taking out 25% of the interest may push a bit of total income into the higher tax bracket.

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to Kevkava
24th Jan 2019 20:48

Yes, that's what it's designed to do. Makes buying rental property on finance less attractive for higher rate taxpayers.
Stops them building up property empires so quickly so as the young and poor can get a leg up on the property market.
Fat chance!

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24th Jan 2019 20:58

Friend, why on earth does the fact that you’re an employee mean you have to complete self employment pages?

Hang on that’s not where you’re putting your letting income, is it?

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By SXGuy
to andy.partridge
24th Jan 2019 21:15

I think it's safe to say the op has confused self employment with rental income. Not that they are filling a self employment page.

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to SXGuy
24th Jan 2019 22:06

Is it? What have you seen that I haven’t?

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