BTL tax query

iazms

Ok even more confused! But thanks for replying.

Surely on House A, should be able to claim interest on £135k as the mortgage has purely been used to fund the BTL's. No where have I read that it is limited to the cost of the house when started to let eg $100k. Can you point me to links where I can read a bit more around this ?

In your example, would it be possible to claim interest on the £80k as that was used to fund the BTL?

Tax is taxing...i hate all this...was so easy when dad used to deal with it all !!

Smi1er

No, you can not claim the interest on £135K on A, the limit is £100K as that was the cost when it was introduced to Letting.

The £80K? Read my previous reply. B was bought with cash, but mortgages werte raised on other properties to raise this.

The Fool has a great section on letting, and believe it or not, the taxman is very helpful

iazms

Ok heres the full picture:

Property A was bought cash for £130k with no intention to let. 6 months later it was remotaged for £105k so that can be let out and the funds raised towards buying Property B which would also be let out. The Open Market Value of Property A when considered for letting out and remortaged was £150k. So can I poetentially get IR up to £150k for Property A ?

PPR has a mortage of £80k. Property B was bought cash for £125k by raising £20k on the PPR and using the £105k from Property A. So I can get IR on the £105k and £20k - right ?

Finally, Property B has been let out for 6 months. So if I remortage it for £80k and withdraw the £80k to pay towards the PPR leaving just £20k oustanding on the PPR, will I still be able to get IR on the £105k and £20k AND the £80k ?

So 3 questions in total. Thanks for baring with me.

Smi1er

iazms wrote: »

Property A was bought cash for £130k with no intention to let. 6 months later it was remotaged for £105k so that can be let out and the funds raised towards buying Property B which would also be let out. The Open Market Value of Property A when considered for letting out and remortaged was £150k. So can I poetentially get IR up to £150k for Property A ?

So why did you buy it? Think very carefully because the taxman isn't stupid, and he's also not a person to be screwed with. There is no way that six months later the property could gain £20K in value (unless of course it's in certain parts of Northern Ireland), but yes IR of £150K (but I would revise the figures to true value)

PPR has a mortage of £80k. Property B was bought cash for £125k by raising £20k on the PPR and using the £105k from Property A. So I can get IR on the £105k and £20k - right ?

IR on £125K

So in all IR on £275K as long as you have actual mortgages on that value.

I have purposely left mortgages owing to a certain value so I get maximum IR and invested the money elsewhere. It does of course help that mortgages and houses are in Wifes name who isn't in full time employment so we get to use her tax allowance:D

iazms

tbh got Property A at a huge discount but thanks for the warning.

Sounds like currently I can only IR up to £125k because the £80k i owe is on the PPR. Unless I can do what I asked in my final question...

****
"Property B has been let out for 6 months. So if I remortage it for £80k and withdraw the £80k to pay towards the PPR leaving just £20k oustanding on the PPR, will I still be able to get IR on the £105k and £20k AND the £80k ?"
****

And I would do exactly what you have with your spouse but unfortunately the wife did not have any credit history, neither in employment so would have been difficult to get the mortgages on her name. But hopefully over next couple of years or so she will have a credit history and accounts from the BTL's.

So almost there, just that final question hopefully.

silvercar

Totally agree with smi1er, you can get mortgage relief upto the value of the property when you first started letting it.

There is no need to move a mortgage from your PPR to the let property just to claim the relief; it is the purpose of the loan that is important not where it is secured.

iazms

OK thanks for all your help guys. Sounds like my only option is to raise about £10k or so for maintenance etc (keeping it realistic) from my PPR for the purpose of spending on the BTL's. Invest it somewhere else eg ISA's and then about a year later throw it back in the PPR but it comes off my PPR loan and not the loan raised for the BTL's. Keep doing this for a few years to increase the IR i can claim on.

That would work right?