How JustAnswer Works:
  • Ask an Expert
    Experts are full of valuable knowledge and are ready to help with any question. Credentials confirmed by a Fortune 500 verification firm.
  • Get a Professional Answer
    Via email, text message, or notification as you wait on our site.
    Ask follow up questions if you need to.
  • 100% Satisfaction Guarantee
    Rate the answer you receive.
Ask TonyTax Your Own Question
TonyTax
TonyTax, Tax Consultant
Category: Tax
Satisfied Customers: 15915
Experience:  Inc Tax, CGT, Corp Tax, IHT, VAT.
13905389
Type Your Tax Question Here...
TonyTax is online now

Is there any tax benefit from buying a buy to let property

Resolved Question:

Is there any tax benefit from buying a buy to let property with an interest only mortgage rather than a repayment mortgage? Is any of the interest reclaimable if you only work part time and earn less than £10k p.a.?

If you live in the property before renting it out and/or live in it prior to selling it on, would you avoid CGT and if so what are the qualifying periods?
Submitted: 3 years ago.
Category: Tax
Expert:  TonyTax replied 3 years ago.
Hi.

There isn't really a difference. You can offset the interest payments in both cases. The capital repayments on a repayment mortgage which will be low in the early years cannot be offset against the rent. At some stage, you will need to repay the loan so if you choose a repayment mortgage, you will be left with a greater sum if and when the property is sold as you will have repaid some of the capital you borrowed which won't necessarily be the case with an interest only mortgage.

Take a look here for information on homes and CGT. If a property has been your main home at some point and it has been let, you will qualify for exemption from CGT for the period the property was your main home and for a maximum of the last 18 months of ownership when you were not living there. Letting relief will reduce the remaining taxable gain but you would not necessarily avoid CGT completely. It's down to the facts and figures of the case.

I hope this helps but let me know if you have any further questions.
TonyTax and other Tax Specialists are ready to help you

Related Tax Questions