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Mortgage on home set against let property !!!????

FitzFitz Settling In NicelyRegistered Posts: 23
The previous accountant of a new client of mine used to set off mortgage payments from my clients home against a let property that is mortgage free on the basis that the client used his own capital to purchase the let property, without that capital he would have had to take out a mortgage. The mortgage payments are therfore an allowable expense. Is this a valid assumption? If so, please could someone let me know which HMRC directive allows this.

Comments

  • paulstaffordpaulstafford Feels At Home Registered Posts: 126
    The interest on the mortgage is allowable.
  • T.C.T.C. Experienced Mentor Registered, Tutor Posts: 1,448
    Just need to show that it actually happened that way.
  • FitzFitz Settling In Nicely Registered Posts: 23
    Thanks for your replies, but I am still not convinced it would wash with HMRC. I think they would want him to take out a buy to let mortgage against the let property. He could then pay off his home mortgage, and the interest only payments would be allowable.
  • BluewednesdayBluewednesday Font Of All Knowledge Registered Posts: 1,624
    He doesn't have to have the loan on the property that is being let but if he already had the mortgage and not increased it in any way then I think it would be more difficult to prove.

    If he just took out a mortgage on his main home to provide the capital for the buy to let then the interest is allowable.

    http://www.hmrc.gov.uk/manuals/bimmanual/bim45700.htm
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