Expense categories

09/05/2019 10:38:18
Reading posts on this forum for the first time I realise that I have previously classified various rental expenses in the incorrect boxes on the form. Presumably this is not important as long as only valid expenses have been claimed and the total is correct?

This year the mortgage on the property has finished being paid off and a redemption fee has been charged. Can this be claimed along with the remaining interest charges?

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Re:Expense categories

09/05/2019 12:06:08

Thanks for your question.

Provided only valid expenses have been claimed and they are not affected by the finance restrictions that came in from 6 April 2017, then you do not need to take any further action for previous years.

Please see the following link for guidance and help on how to work out your rental income and the changes to the finance costs:

Income Tax when you let property: work out your rental income

Finance costs that will be restricted include interest on mortgages, loans and overdrafts.

Re:Expense categories

09/05/2019 15:01:34
Thanks for the reassurance re past years.

As 2018-2019 was the last year of mortgage payments on the property that is being let the interest paid totals less than £200, but when the mortgage finished the lender charged £295 redemption fee. I have researched online and several websites seem to suggest that this charge can be included as a finance cost, but I wanted to check this was correct before going ahead. The link you gave in your reply doesn't provide an answer.

Re:Expense categories

10/05/2019 13:33:13

Thanks for your question. The redemption fee is not an allowable expenses against your rental income, because it does not meet the wholly and exclusively test. It is not an expense incurred in the actual running of the rental business. It is capital expenditure and as such, you may be able to claim it as a capital expense against capital gains tax when you sell the property. I hope this helps.