Deducting rental property mortgage interest and finance costs

If you rent out a property, HMRC let you claim a deduction on the interest and finance costs on any loan - in technical terms it's a basic rate tax credit, subject to certain restrictions.

Do not tag the transaction as rental expense

You can choose to tag it as personal, or leave it untagged.

You need to enter the interest / finance cost separately

Interest needs to be entered separately, and not tagged as a transaction. If it's a jointly held property (or series of them) then you need to include only your share.

You cannot claim a deduction for mortgage repayments - only the interest.

Before you start, you'll need to have details of the interest you have paid in the year, probably on a statement from your lender. Note that untied does not allow bank transactions to be tagged as property interest payments - we often can't distinguish interest from repayments and the statement is a more reliable source.

This is how to find the right place to enter the information.

Shortcuts

• Mobile app
• untied Pro in the browser

Entering the data

In the untied mobile app

1. Navigate to Profile and select Income
2. Choose the Property option (this box may or not be highlighted depending on whether information has already been entered)

3. Select the "More Options" dropdown

4. Enter interest in whole pound amounts. This figure should come from the statement from your lender and press Save

6. untied will calculate the appropriate tax allowance and populate the relevant boxes on the tax return submission.

In untied Pro in the browser

1. Navigate to Tax Forms > UK Property (make sure you're in the right tax year!). You can do this via the dropdown, tapping on the form, or using the search tool.

2. If you've already tagged property transactions, then it should already be checked to include this section. If not, mark it and indicate how many properties you have.

   Enter the interest paid in the relevant tax year. Don't forget to click save!

   (Note that this order may not reflect the order in HMRC forms - the order we have it is the one that makes most sense for untied users)

Why is this not a tag

We sometimes get asked why this isn't a tag. This is because for many people, the amount paid to the lender includes repayments as well as interest. So that's why it's added directly, based on information on statements from your lender.

In MTD does this need to be reported quarterly?

If you don't have the numbers you can't include them. Add your interest and finance costs once you get your statement from the lender, which may be after the end of the year. In this case untied will submit it as part of the end of year process.