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Sam, Accountant
Category: Tax
Satisfied Customers: 14195
Experience:  26 HMRC expertise, PAYE, Self Assessment ,Residency, Rental Income, Capital Gains, CIS ask for Sam Tax
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Hi I am thinking of buying a small flat to rent out (Buy to

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Hi I am thinking of buying a small flat to rent out (Buy to let). The purchase price is £45K and my offer has been accepted. I can afford to pay cash but understand that it is advantageous to take out a small interest only mortgage for tax purposes. Please let me know if that is actually the case for such a small amount (the flat is already rented to tenants who want to stay and who are paying £475 / month).

Please let me know if you require further information
H Ross

Thanks for your question, I am Sam and I am one of the UK tax experts here on Just Answer.

The main advantage is that the loan interest (and in this case would be the full payment) can be offset against the rents received - so you pay less tax on the rental income.
However you still end up owing the original amount borrowed, so its a case of whether you fund the purchase now, or some years down the line - but make a saving on your tax position in the interim period of time.


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