RESIDENTIAL PROPERTY FINANCE COSTS

In what tax year do I claim residential property finance costs

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Property purchased with a BTL in August 22.

Interest was added to their BTL as one lump sum 04 July 23.

Rental accounts are prepared on accruals basis.

My question is 'Am I able to proportion the loan interest in the earlier tax year 2022-23 or must I wait until later tax year 2023-24?'

I cannot find an answer online.  If any member of this community is able to reply to my question but can also direct me to the legislation I would be most grateful. Thank you.

 

 

Replies (4)

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By IWantToLearn
22nd Sep 2023 16:21

If the accounts are done on the accruals basis you should accrue the interest rather than account for it only when paid.

You would then likely need to accrue the 22/23 element of the finance costs.

The tax treatment for your rental profits should follow that of the accounting treatment (ITTOIA 2005, S.271A) unless mentioned elsewhere in the legislation, which it isn't.

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By Catherine Newman
22nd Sep 2023 17:26

I only ever use the cash basis as I receive statements from Letting Agents or clients prepare them that way. I have been doing it since 1988.

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By Southwestbeancounter
25th Sep 2023 14:37

Can't you just get the lender to issue you with a certificate of loan interest for the fiscal year?

That's what I make our clients request from their lenders and it works well.

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Replying to Southwestbeancounter:
By SteveHa
26th Sep 2023 08:37

Southwestbeancounter wrote:

That's what I ask our clients request from their lenders and it works well.

Fixed that for you ;)

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