New build tax liability
Question from R updated on 22nd December 2017:
We are looking at a potential land & build package to build a new house as an investment property for rental. We would like advice on our tax liability. As it would be a land & build package, we will pay it in stages. However, the rental income will only start when the build is over and house is rented. Can we claim on the loan interest that we pay before the house has been built and rented under our LTC company?
Our expert Mark Withers responded:
Yes you can deduct the interest as it is incurred because the asset being funded will produce income in "any income year". Note though, the Labour government tax policy is to introduce ring fencing of rental property losses, so if the plan produces a loss you are unlikely to be able to offset it against non rental income for a tax saving after the law is changed. Welcome to our brave new world!
Mark Withers and his team at Withers Tsang & Co specialise in advising on property related transactions, valuation and restructure services and tax planning.
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