Question:
Please can you explain what costs can be offset against income at the initial purchase stage of a property? Costs such as mortgage product fees, broker and valuation fees etc., plus solicitors costs can be substantial. I understand that all re-mortgage costs can be offset; however, is it the same at start-up for new purchase costs?
Arthur Weller replies:
If you look at HMRC’s Property Income manual (at www.hmrc.gov.uk/manuals/pimmanual/PIM2205.htm), you can see that costs relating to the purchase of a property are capital expenses and cannot be offset against rental income. However if you look at www.hmrc.gov.uk/manuals/pimmanual/PIM2066.htm, you can see that the costs involved in setting up a mortgage are allowable against rental income, in the same way as interest on the mortgage.
