Can I offset residential mortgage interest against BTL?

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    #1

    Can I offset residential mortgage interest against BTL?

    Hi All,

    I am in the purchase of remortgaging BTL my home and buying a new house.

    I wondered whether it would be possible to claim tax relief against the interest repayments of my new property against the profits of my BTL? In other words working out the interest on my residential property and claim against this to the tune of 20%.

    It is an expense as we need to borrow against said property to 'buy' the BTL.....

    Hope this makes sense......

    Thanks

    Mark
    Tags: None
    #2
    I don't understand.

    What does " the purchase of remortgaging BTL my home and buying a new house" mean?
    When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
    Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

    Comment

      #3
      Apologies, in the process of buying a new home, i am keeping our original property and buying another. We will get a new mortgage on the new house and get a BTL mortgage on the other.

      Comment

        #4
        In which case, I think that the answer will be no.

        If you were extracting equity from an existing home and using that buy all or some of a BTL, that would qualify.
        But the new mortgage on a new property which is to be your home fails the wholly and exclusively test.
        When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
        Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

        Comment

          #5
          Is there a way to make a declaration at the time of purchasing outlining that a proportion of the mortgage from the property is required for the 'purchase' of the BTL?

          Comment

            #6
            Can I clarify that you're doing Let to Buy? i.e. you are renting out your current home after extracting some equity from it during the remortgage, to be used as deposit for the new primary residence?

            On the assumption you are, the interest on the increased mortgage in the BTL is allowable, as you have introduced the asset and liability into the BTL business. The primary residence has not been used to "buy" the BTL at all, and so cannot.

            Comment

              #7
              Originally posted by Fothers1987 View Post
              Is there a way to make a declaration at the time of purchasing outlining that a proportion of the mortgage from the property is required for the 'purchase' of the BTL?
              If I've understood correctly, you already own the BTL property, so there's nothing to purchase.
              You're actually taking equity out of the BTL property to buy your new home.
              When I post, I am expressing an opinion - feel free to disagree, I have been wrong before.
              Please don't act on my suggestions without checking with a grown-up (ideally some kind of expert).

              Comment

                #8
                When you turn your former home into a rental property and withdraw 70 % of the market value by taking out a mortgage loan, the interest paid on the 70% loan is allowed 20% as business expense against the rental income.
                Yes , can claim

                The interest payment on mortgage loan for new home is not part of the rental property.
                No . cannot claim.

                Comment

                  #9
                  OK. I think i get it.

                  As I'm doing LTB it's a definite no, but, if it was BTL it's a maybe.

                  Comment

                    #10
                    20% of interest paid on the mortgage for rental property can be claimed as expense in your tax return.

                    The interest on mortgage on own home CANNOT be claimed.

                    Trying to decide by LTB or BTL is confusing your thinking.

                    Comment

                      #11
                      It is often possible and appropriate to claim the interest expense of some/all of a mortgage on a personal property. The ability to to deduct interest is not predicated on what the loan is secured against.

                      But not in the op's case

                      Comment

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