Tax relief on res. mortgage

euvalaka404

My first post here.
I am looking to remortgage my PPR (at present I have no mortgage)
to buy a BTL as an investment.
All the money raised on the remortgage will go towards the BTL.
When calculating the Tax Position on the BTL, can I claim the mortgage interest against the rental income?

Conrad

Yes u can. I wouldn't invest in the UK though, unless it's just for income and even then u need to be careful as many areas are becomming saturated with rental rpoperty as those who cant sell are letting thier places.

euvalaka404

Thanks for that. Conrad.
My big fear is that I have spoken to a no. of Mortgage advisors, and 95 % of them have said 'NOT POSSIBLE'.
Does anyone have any reference to anything from our friends at IR/HMRC?
How does one compute the tax calculations?
I am looking to take out a interest only mortgage, where interest payments
are about 125% of renral income?

silvercar

Mortgage interest upto the value of the property when first let is an allowable expense against rental income. There is no requirement to secure the mortgage on the let property.

For general advice on landlord tax affairs:

http://www.direct.gov.uk/en/MoneyTaxAndBenefits/Taxes/TaxOnPropertyAndRentalIncome/DG_10013435

Gorgeous_George

euvalaka404 wrote: »

... I have spoken to a no. of Mortgage advisors, and 95 % of them have said 'NOT POSSIBLE'....

Now that is worrying.

What are mortgage advisers doing offering tax advice? It is not their area of experise.

GG

m1ntie

I think some people have misunderstood your question!

You absolutely cant claim tax relief on a mortgage secured against your PPR. You can however claim tax relief on interest for a mortgage secured against your BTL.

Gorgeous_George

m1ntie wrote: »

I think some people have misunderstood your question!

You absolutely cant claim tax relief on a mortgage secured against your PPR. You can however claim tax relief on interest for a mortgage secured against your BTL.

except that...

... you absolutely can.

GG

m1ntie

Not according to my Insector of Taxes

m_13

Then your 'Insector' is wrong!

Take a look at this topic on Taxation Web: http://www.taxationweb.co.uk/forum/pay-off-btl-by-taking-out-mortgage-on-main-home-t25740.html

The key things are that you must tell the person you are remortgaging with that the purpose of the loan is to buy another property for BTL (so the purpose of the loan is clearly marked as funding your rental business capital account) and the whole loan must be used for this purpose (otherwise the interest will not be wholly deductible).

Gorgeous_George

Is someone taking the p around here?

GG