geoffxr4

i know there are a few property investors on here and i'm slightly unclear on something.

Firstly, obviously Mr taxman wants to get some of the profits. He gets this in 2 ways:

1. income tax on profits of the letting business
2. Capital gains tax(CGT) when u sell a property.

I always thought a long term investor would keep remortgaging a property to buy more places and never sell. Therefore he would never pay CGT at all, and would pay as little income tax as possible because he could offset the interest aspect of the loan against the tax liability (the loan always increasing as the value of the property increased).

However, thinking about this i'm not sure the government does allow this scenario.

My question to any property investors is: When remortgaging a property do u claim tax relief on ALL of the interest repayments, or only up to the initial purchase of the property. i.e. a property bought for £100,000 intially morgaged for £85,000 now worth say £140,000 and remortgaged for £110,000. Can u claim interest relief for all of the interest only repayment or only 10/11sth of it? I always thought u cld as long as the remortgaging was wholly and exclusively for the business, but now i'm not so sure. The government wld rather u sold and rebought somewhere else cos they'd get their CGT. Or slowly screw u for more tax as ur investments go up in value..

Any ideas investors or tax lawyers out there...?

geoffxr4

Thinking about it, i DO think that u could claim interest on all the mortgages regardless of initial purchase price as long as it's used wholly and exclusively for the business. But interested to hear what others think...

15D

2 words......
Taper relief

Iain Mac

Unless the Government do another U turn taper relief is being replaced with a flat 18% tax as announced in the pre-budget statement last year.

Lots of representations have been made, now we have to wait and see how much Brown & Darling need the cash.