As the property has been empty having major repair work carried out, even without the mortgage interest there is a loss. So eg loss of £5k, finance charge of £4k. £2k is allowed to be added to the £5k loss which is carried forward to next year. What happens to the £2k which would if a gain had been made, have been put into residential finance costs not inc in "loan int and other financial costs". This would have reduced the tax charge by 20%, but there is no tax charge!