I just wondered if anyone had come across this situation ? I know ERP’s are tax deductible in the same way as interest is ie on a now reduced basis since 2017/18, but can they still be offset against rental profits if we roll them up and pass them onto the next new mortgage ? I would assume yes as the debt is definitely there and we have taken the hit on the equity of the property ie the ERP has been added to the new loan. We are then paying a small proportion of the interest monthly on the ERP amount in the new mortgage. The question is I think , is the ERP tax deductible when it has been incurred ie added to the new mortgage or does it have to be paid upfront in cash to claim tax relief on it ?
You have effectively paid it because it has been added to the loan on which you are paying interest - ie you have borrowed the money to pay for it.
so does that mean I can treat the whole thing ie a £2000 ERP as mortgage interest and get tax relief on it @20% irrespective of whether paid up front or added to the new mortgage ?