Uncle's House Purchase
Discussion
Guys, a little guidance for my Uncle who is currently unencumbered on a property he intends to let out and buy a second home as his main residence:
Can he only claim tax relief on rental income via a buy to let mortgage on the property he intends to rent out?
Could he claim tax relief for another type of mortgage or the mortgage for the property he resides in?
If he rents his current property out and obtains a mortgage on the second property what will his tax position be when he comes to dispose of the first (let) property?
Does the allowance for C.G.T. carry over every year it is not utilised or will he be looking to give a hefty portion of any capital to the government?
Can he only claim tax relief on rental income via a buy to let mortgage on the property he intends to rent out?
Could he claim tax relief for another type of mortgage or the mortgage for the property he resides in?
If he rents his current property out and obtains a mortgage on the second property what will his tax position be when he comes to dispose of the first (let) property?
Does the allowance for C.G.T. carry over every year it is not utilised or will he be looking to give a hefty portion of any capital to the government?
Pferdestarke said:
Guys, a little guidance for my Uncle who is currently unencumbered on a property he intends to let out and buy a second home as his main residence:
Can he only claim tax relief on rental income via a buy to let mortgage on the property he intends to rent out?
Could he claim tax relief for another type of mortgage or the mortgage for the property he resides in?
If he rents his current property out and obtains a mortgage on the second property what will his tax position be when he comes to dispose of the first (let) property?
Does the allowance for C.G.T. carry over every year it is not utilised or will he be looking to give a hefty portion of any capital to the government?
If he is unsure of the tax consequences then he should speak to an accountant as he will need to report the income on his tax return.Can he only claim tax relief on rental income via a buy to let mortgage on the property he intends to rent out?
Could he claim tax relief for another type of mortgage or the mortgage for the property he resides in?
If he rents his current property out and obtains a mortgage on the second property what will his tax position be when he comes to dispose of the first (let) property?
Does the allowance for C.G.T. carry over every year it is not utilised or will he be looking to give a hefty portion of any capital to the government?
In essence:
INTEREST paid on a mortgage (any type of mortgage) is an allowable expense against rental income;
If he is living in property then this is his PPR (Principle Private Residence). Period of occupation in this house are exempt from Capital Gains Tax. If he moves to the new house and lets out the old house then the new house will be come his PPR. There are various other reliefs from CGT available when he does come to sell his old house i.e. the last 36months rule and letting relief. Once again your uncle should speak with an accountant who understands his position as a whole.
The annual CGT allowance is exactly that, annual. As such it is only available in the tax year and not carried back or forward. Use it or lose it!
There are various way to mitigate CGT on the sale of a house so as stated above he should really sit down with an accountant who knows his position.
Edited by Mx_Stu on Friday 24th April 14:58
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