Interest Only and Repayment mortgages
Discussion
Afternoon
I'm in the process of moving down south at the moment. My new place will be ready May/June time and my house in Newcastle is currently on the market. The world being as it is, it's proving difficult to sell so i'm looking at my options.
The obvious candidate is to rent out the house up north until the market pics up again, which has given me a couple of questions.
1. The difference in cost between an IO and Repayment mortgage directly goes to pay off the capital doesn't it? Therefore if I keep my mortgage as repayment then the extra cost will be recouped when I come to sell? That's my very simple understanding, am I missing anything?
2. I know I won't have any capital gains issues for the next few years, but as the rental income will be slightly less than the monthly interest payment on the mortgage, what tax liability will I have, I won't be making a profit by renting, but I assume that doesn't matter when it come to mr tax man
p.s. anybody want to buy a house in newcastle?
I'm in the process of moving down south at the moment. My new place will be ready May/June time and my house in Newcastle is currently on the market. The world being as it is, it's proving difficult to sell so i'm looking at my options.
The obvious candidate is to rent out the house up north until the market pics up again, which has given me a couple of questions.
1. The difference in cost between an IO and Repayment mortgage directly goes to pay off the capital doesn't it? Therefore if I keep my mortgage as repayment then the extra cost will be recouped when I come to sell? That's my very simple understanding, am I missing anything?
2. I know I won't have any capital gains issues for the next few years, but as the rental income will be slightly less than the monthly interest payment on the mortgage, what tax liability will I have, I won't be making a profit by renting, but I assume that doesn't matter when it come to mr tax man
p.s. anybody want to buy a house in newcastle?
Make sure to record the fact that you are making rental losses each year on the rented property (don't forget that other costs besides the mortgage interest can be offset too). These losses can be accumumulated and brought forward so that they can be offset against any rental profits that might eventually be made on the property.
However, rental losses cannot be offset against any capital gain arising if and when the property is sold.
However, rental losses cannot be offset against any capital gain arising if and when the property is sold.
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