Is interst deductible

ms_newbie

HI there. I am about to complete my first self assessment to cover income from buy to let property. I understand that I can deduct mortgage interest from income. What I want to know is this - I raised the deposits for the Buy to Lets from a loan and some credit cards - am i allowed to deduct the interest for these too? Any advice would be appreciated.

silvercar

As I understand it, you can deduct all the interest for loans upto the value of the property when it first entered the BTL "business". So you should be able to include interest on loans and credit cards provided you can demonstrate (timings etc) that that is the reason you took the loans.

The problem may occur when you pay off the credit card bills, you will then have "used up" that loan amount. I was going to include part of my home house purchase as the deposit amount on the BTL (as we increased the home mortgage to raise the deposit). I was advised that this amount would disappear from interest relief calculations if I then reduced my home mortgage. So I'm not claiming that relief and won't do so until I withdraw equity from the BTL property.

Hope that makes sense, I'm sure an accountant could explain it clearly. I'll find a link to the IR examples.

silvercar

Have a look here:

http://www.hmrc.gov.uk/manuals/bimmanual/BIM45700.htm