Hi all,
I have a Buy To Let, flexible mortgage (i.e. I can make overpayments and withdraw any capital I've put in whenever I want). So far I've only used this to put in the occasional lump sum.

The actual mortgage payments each month are well under what I receive in rent, and so far I've been keeping/spending the excess like normal wages.

It's only just dawned on me how much income tax I'm paying on this excess (it takes me into the higher tax bracket), so I'm thinking of remortgaging so that the payments match rent I receive, and ok I lose out on my extra 'spending money' each month but in the long run it's more tax efficient as I can write the whole rent off as a necessary incurred cost.

But, I'm wondering if I actually need to remortgage - could I just put the excess money into the flexible mortgage as overpayments each month? I'm not sure whether the Inland Revenue will buy it when I come to declare it as a necessary incurred cost as it has been my choice to make the overpayments, therefore is it really a cost?

Also - I've just realized that I could theoretically then draw it all back out the following tax year, having avoided paying income tax on it. What's the rules on this? Have I missed something? Am I being stupid????!
Regards
Reece

Hi Reece,
I rent one of my houses and the best way to keep mr brown of the profit you make is to not make a profit.

sounds daft but you can take what would normally be taxed income into a tax free benefit.

My tenant pays ?600p/m so I make sure my mortgage repayments match or go over that amount bye a few quid. either pay off your mortgage quicker or borrow on the property you let so they payments go over what the rent is and invest it in your own house. that way it becomes a tax free benefit as your personal mortgage is lower.

but yes... renting a house is classed as a business so its a taxable income.. if you make any

hope this helps.
Thank you
Gregory