Mortgage Interest
JodieR
Registered Posts: 1,002 Beyond epic contributor 🧙♂️
My client has taken out a mortgage to purchase a rental property but has secured the mortgage on his own home (which he owns outright) instead of on the rental property. Will this affect how much of the mortgage interest he can claim in the rental accounts? I can't see that it will but I'd like to be sure about it.
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Comments
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I'm pretty sure it qualifies - it was taken out in order to finance the rental property. I can't remember definitively though.
From my ATT text book
"mortgage interest is deductible when calculation property income provided the related borrowing was applied wholly and exclusively for the purposes of the lettings business."
I dont think it matters which property the loan is secured on.0 -
Thanks
Actually I'm remembering something from a CPD course now... was there not a case a while back where a man owned a shop and lived above it (or rented it out, I can't remember) and he'd taken out a large loan and said on the application form that the loan was for one part of the building/business and used it for the other and HMRC ended up disallowing the interest??
In my case the mortgage was taken out on the day of the purchase for 95% of the purchase price so it's obvious that that is what it was used for so I hope it'll be fine. Might do a bit more digging though to read up on that case & if I remembered it correctly I'll make sure the money was allowed to be used to purchase a rental property.0 -
Monsoon is right. Makes no difference what property the loan is secured on, or indeed what the funds were actually spent on (if refinancing).
The only real restriction is that the loan should not exceed the market value of the rental property when first let.0 -
brilliant, thanks dean (& jenni)0
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