IR question related to BTL

iazms · 15 January 2008 at 9:03PM

I have a BTL. But I in the process of remortgage my residential house. Looking to borrow an additional £20k to be used for repairs and maintenance on the BTL. But the renovations will occur in the summer so will I be able to get IR on that £20k from today?

Also what happens if I dont end up using it on the BTL but instead it just ends up sitting in an ISA for example? Or use it on something else personal and not on BTL?

Many thanks

HugoSP · 15 January 2008 at 10:04PM

iazms wrote: »

I have a BTL. But I in the process of remortgage my residential house. Looking to borrow an additional £20k to be used for repairs and maintenance on the BTL. But the renovations will occur in the summer so will I be able to get IR on that £20k from today

Yes you will but probably only from when you use it. If you just raise it and put it into a hight interest account until you're ready for it, making less than you the interest you're paying for it, I guess you would claim the difference between the investment rate after tax and the borrowing rate. If you managed to invest it at a profit then I guess this profit would be taxed.

I raised finance on our house in the shape of a secured loan of £25k to buy a BTL because the BTL at the time was in such a state we couldn't mortgage it, let alone rent it out.

A few months later I refinanced and rolled the secured loan and mortgage together to give us a bigger mortgage that was cheaper to service than the loan and mortgage together.

We later moved and I took out a new mortgage on our new home at some £10k more than we had.

All this time we claimed the interest on the initial £25k loan amount until we paid off the whole mortgage. HMRC were quite happy with that, as I spoke to them personally about it.

Also what happens if I dont end up using it on the BTL but instead it just ends up sitting in an ISA for example? Or use it on something else personal and not on BTL?

Then you can't claim tax relief against the interest.

silvercar · 16 January 2008 at 11:15AM

The answer may depend on the amount of borrowing you currently claim releif for. The rules state that you can claim relief upto the value of the property when you first started letting it. So if at present you aren't claiming relief upto that value you could now use the relief on the interest on the money you have just borrowed.