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bigduckontax
bigduckontax, Accountant
Category: Tax
Satisfied Customers: 3816
Experience:  FCCA FCMA CGMA ACIS
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I am the owner of three commercial properties in London and

Customer Question

I am the owner of three commercial properties in London and my loans were set on
a fixed rate for five years.Last year i sold one property and paid off substantial debt.There was
heavy penalties for doing this which were two amounts 1£80,000 2 £25,000.
Can i offset these penalties against my rental income ?
Best Regards
Submitted: 2 years ago.
Category: Tax
Expert:  bigduckontax replied 2 years ago.
Hello, I'm Keith and happy to help you with your question.
As you are not classed as a Developer/Trader, which from the tenor of you question is not the case, then the following method is the appropriate tax treatment:
If you do not have lots of properties and buy/sell continually, this will be regarded as "Capital Expenditure" and set-off against Capital Gains Tax at some future indeterminate date when you dispose of the relevant property. Fuller data is available from Taxation Web at.
http://www.taxationweb.co.uk/forum/rental-income-allowance-for-mortgage-penalty-t17960.html#WZm6c5GWeFh7GIk7.99
If, however, you are a Developer/Trader, then these penalty charges can be offset against the rental received for the relevant property.
I do hope I have been able to assist you with your inquiry.

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