Fixed Term Mortgage Breakage and CGT

SuperO'B · 17-10-2022 8:48am #1

Hi there,

I am considering fixing for 10 years on my mortgage which is soon to be a rental. If I were to break the mortgage to sell the house then can the breakage fees be deducted from the CGT burden in this case? I am assuming they will but don't want to make too many assumptions on this.

Also, are new windows and a kitchen costs likely to be accepted as deductions for improving the value of the property? Thanks

Allinall · 17-10-2022 8:56am

Fairly sure a breakage fee would not be allowed against CGT.

The others- yes.

SuperO'B · 17-10-2022 10:30am

Thanks. Now that I think of it, I may be better to fix for the 5 years at 2.2% instead of 10 years at 2.8%. My worry is exiting the 5 years into high interest rates but it is a rental property. This makes me wonder that if I exit into high interest rates then I can just deduct this higher rate from the rental income which should balance out. In fact, do interest rates make any difference to rental properties if they are just being deducted from rental income for tax purposes anyway?

Geuze · 17-10-2022 11:21am

Mortgage is nothing to do with CGT.

Interest on the mortgage may be deducted from gross rental income.

SuperO'B · 17-10-2022 11:23am

https://www.boards.ie/discussion/comment/119755591#Comment_119755591

Thanks. I guess I was thinking that could it be allocated to the cost of disposable of the asset similar to solicitor fees since the reason for breakage is linked directly to the sale of the property. Thanks for clarifying

dennyk · 17-10-2022 5:24pm

I am considering fixing for 10 years on my mortgage which is soon to be a rental.

If you mean that you currently live in the house and have an owner-occupier's mortgage, you should know that your rate is going to increase when you move out and start renting it out. Buy-to-let mortgage rates are almost always higher.

Fixed Term Mortgage Breakage and CGT

Comments