BTL mortgage / tax query

[MGYoung]

I have a second property that I rent out. The mortgage is a 25 year repayment tracker mortgage. I know I can make overpayments of up to 10% of the outstanding balance on the mortgage.

If I do make a single one of overpayment this tax year (say £800) will this just reduce the capital amount owed?

I am aware that I pay income tax on the difference between the revenue received through rent in a given tax year and the interest only payments on the mortgage over the same period. If I make an overpayment will this help reduce my tax liability or will it make matters worse? (less capital = less interest payable on said capital = higher tax liability)

thanks and all the best.

Martin.

[Eric Mc]

Only if your interest charge in the tax year also goes up. Capital repayments don't count as deductions for tax purposes.

[thewave]

Just a quick note, but if you have a mortgage on your private residence, it would make more sense to make an overpayment on that and not the BTL mortgage.