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  • Making decision to classify as FHL prior to income being received

    We are in the process of building a property that will qualify as an FHL (in the UK, furnished, commercially let). Furthermore, we intend the property to pass all 3 occupancy conditions (once it is complete and we commence commercial letting). With this intention in mind, it is clear we can incur losses in the tax year(s) prior to the property being let as a FHL (and then these losses are offset against FHL profits of a later year). However this has to assume that we will be successful in meeting the occupancy conditions. Question: What happens to the incurred losses if, despite all intentions, we end up not meeting the occupancy conditions? For example: - FY23: Incur £10,000 of allowable costs - FY24: Start letting the property on (eg.) 1 July 2023 (therefore offset income against prior year costs in FY24) - FY25: First financial year where we’d know for definite that we’ve met the occupancy conditions, after the property has been let for a full 12 months Many thanks.
  • Tax relief from mortgage on a different property

    We have purchased a property (Property B) which is to be used as either a residential let or furnished holiday let. Under either option my understanding is that I would be entitled to offset associated mortgage interest expense as an allowable expense (subject to a cap of 20%). However the mortgage has actually been taken out on our main property (Property A), which was unencumbered. Despite the fact the funding expense is on a separate property, does the fact that the mortgage was wholly and exclusively taken out for the purpose of purchasing Property B still permit me to use the mortgage interest for tax relief against the income derived from Property B?