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Mortgage interest against Rental Income?
Brighty
Posts: 755 Forumite
in Cutting tax
Hi
I need some help working out the amount of mortgage interest deductions I can make against rental income please.
Myself and my brother bought the family home off our parents in 2002 when they relocated and we stayed behind living there. House was valued at 170k and we paid them 105k with a 100k mortgage.
In May 2008 I relocated to the Northeast into a rental property, my brother had already moved to Germany, also renting, so we rented the house out. House was worth approx 220k at this point with around 70k outstanding on the mortgage.
Tax years 08-09 and 09-10 we deducted the interest on the mortgage from the rental income.
In May 2010 my wife and I decided the relocation was permanent, so bought a house for 136k with a 110k mortgage.
For tax year 10-11 can I now also claim some of the interest from my current home mortgage against my half of the rental income? I’ve had differing answers on it before. If we had sold the house I could have released approx 75k making my current mortgage 75k less, so it is a cost due to the rental ‘business’ is it not? So can I claim a percentage (75/110) of my current mortgage interest in addition to my half of the let property mortgage? Or as my current home mortgage is a joint one with my wife, can I only claim half of it? Or nothing at all?
Cheers
Brighty
I need some help working out the amount of mortgage interest deductions I can make against rental income please.
Myself and my brother bought the family home off our parents in 2002 when they relocated and we stayed behind living there. House was valued at 170k and we paid them 105k with a 100k mortgage.
In May 2008 I relocated to the Northeast into a rental property, my brother had already moved to Germany, also renting, so we rented the house out. House was worth approx 220k at this point with around 70k outstanding on the mortgage.
Tax years 08-09 and 09-10 we deducted the interest on the mortgage from the rental income.
In May 2010 my wife and I decided the relocation was permanent, so bought a house for 136k with a 110k mortgage.
For tax year 10-11 can I now also claim some of the interest from my current home mortgage against my half of the rental income? I’ve had differing answers on it before. If we had sold the house I could have released approx 75k making my current mortgage 75k less, so it is a cost due to the rental ‘business’ is it not? So can I claim a percentage (75/110) of my current mortgage interest in addition to my half of the let property mortgage? Or as my current home mortgage is a joint one with my wife, can I only claim half of it? Or nothing at all?
Cheers
Brighty
0
Comments
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Good question and you will get conflicting advice on here from various professionals as this has been discussed extensively before.
I would say no you could not because the finance on your (residential, personal) home was not raised for the purpose of your (business) B2L. If you have done as you mentioned (release equity from B2L to fund residential) then evidently you could, but you haven't. However, that is just my opinion.
Have you spoken to an accountant? a quick 30 minute session (that you can often get for free as an introduction) should quickly answer it although I am aware opinions on this can even differ between accountants depending on how risk averse they are!Thinking critically since 1996....0
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