| Topic: | Re:Re:Re:Re:Re:Re:Re:Re:Re:Mansion Tax and Bedroom Tax | |
| Posted by: | Joe Conneely | |
| Date/Time: | 20/04/15 19:43:00 |
| One needs to differentiate between the financing cost (interest) and the debt on which the interest is incurred (the mortgage loan). In certain cases the UK tax system does indeed give relief by way of interest deductions against taxable income (buy to let being the best known) but for a long time now there has been no relief on mortgage interest to buy your own home for example. However neither case gets tax relief for repayments of the mortgage loans. On the issue of your death the tax is based on your net estate. So if your executors have to sell a property and repay a mortgage loan they have only the £250K you state to distribute. At the same time there has been a recent tightening up of the rules in this area given abuses of leveraging up the debt on certain assets before death in trying to reduce values. My point was that under current capital gains tax law and on current information for any Mansion tax, there will be no deduction allowed for the mortgage loan principal related to that property. Instead you will be taxed on the gross value ignoring the mortgage loan still outstanding as time of sale/valuation. |